CANADA FX DEBT-C$ weakens on cheaper oil, eye on GDP next week

Fri Mar 27, 2015 4:48pm EDT
 
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* Canadian dollar at C$1.2600 or 79.37 U.S. cents
    * Bond prices higher across the maturity curve

 (Updates to close, adds comment)
    By Andrea Hopkins
    TORONTO, March 27 (Reuters) - The Canadian dollar fell
against its U.S. counterpart on Friday, sideswiped by retreating
oil prices and facing concern that Canadian economic growth data
next week could show more weakness.
    Brent oil fell below $50 a barrel after spiking higher on
Thursday on Saudi-led air attacks in Yemen. 
    Canada is a major oil producer and its currency had risen on
Thursday along with oil prices on news of the air strikes, with
market participants concerned over crude supplies in the region.
The fall-back in oil prices hit major commodity currencies.
    "The CAD was already on the back foot given the influence of
lower commodity prices," said Jack Spitz, managing director of
foreign exchange at National Bank Financial. "The
worst-performing currencies are Canada, Australia and Norway,
and that speaks volumes in terms of where the market sentiment
is with respect to the commodity block right now." 
    Investors were also focused on a speech by U.S. Federal
Reserve Chair Janet Yellen in San Francisco. She said the
central bank is giving "serious consideration" to beginning to
reduce its accommodative policy and that a rate hike may be
warranted later this year, although a downturn in core inflation
or wage growth could force it to hold off. 
    The Canadian dollar ended the North American
session at C$1.2600 to the U.S. dollar, or 79.37 U.S. cents,
weaker than Thursday's close of C$1.2471, or 80.19 U.S. cents.
    Spitz said market focus was turning to Canadian gross
domestic product data for January due out on Tuesday, with the
currency at risk of weakening further if the figures are as
weak, or weaker, than the expected 0.2 percent decline.
    "We'll be looking at monthly GDP growth, and if it is minus
in January as expected, ultimately that could play into a weaker
Canadian dollar," he said.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 11.5 Canadian
cents to yield 0.526 percent and the benchmark 10-year
 rising 59 Canadian cents to yield 1.369 percent.

 (Reporting by Andrea Hopkins; Editing by Peter Galloway)