June 19, 2017 / 2:08 PM / 3 months ago

CANADA FX DEBT-C$ dips after big gains last week

    * Canadian dollar at C$1.3227, or 75.60 U.S. cents
    * Bond prices mixed across flatter yield curve
    * Gap between 2-year and 10-year yields hits narrowest since
October

    TORONTO, June 19 (Reuters) - The Canadian dollar weakened
against its broadly firmer U.S. counterpart on Monday, as the
market paused after the unit last week posted its strongest gain
in 18 months on signals from the Bank of Canada that higher
interest rates lie ahead.
    The loonie rose 1.9 percent last week, its biggest advance
since the first week of 2016.
    The U.S. dollar        rose against a basket of major
currencies, helped by comments from New York Federal Reserve
President William Dudley suggesting the central bank remained on
track to raise U.S. interest rates further despite recent
disappointing inflation data.             
    At 9:47 a.m. ET (1347 GMT), the Canadian dollar          was
trading at C$1.3227 to the greenback, or 75.60 U.S. cents, down
0.1 percent.
    The currency traded in a range of C$1.3211 to C$1.3260. It
touched its strongest in 3-1/2 months on Wednesday at C$1.3165.
    Speculators cut bearish bets on the Canadian dollar for a
third straight week, data from the U.S. Commodity Futures
Trading Commission and Reuters calculations showed on Friday.
Canadian dollar net short positions fell to 88,595 contracts as
of June 13 from 94,501 a week earlier.              
    In May, net short positions reached a record high 99,109
contracts.
    U.S. crude        prices were up 0.40 percent at $44.92 a
barrel.
    Prices of oil had come under pressure over the past month
from rising production in the United States, Libya and Nigeria.
Oil is one of Canada's major exports.      
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 3.5 Canadian
cents to yield 0.916 percent and the 10-year             falling
5 Canadian cents to yield 1.528 percent.
    The gap between the 2-year and 10-year yields narrowed by
1.4 basis points to a spread of +61.2 basis points, its smallest
gap since Oct. 26, as shorter dated Canadian bonds
underperformed.
    Canadian wholesale trade data for April is due out on
Tuesday, while inflation data for May is due on Friday.         

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
 

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