CANADA FX DEBT-C$ eases on weaker crude; investors brace for weak GDP data

Mon Mar 30, 2015 4:44pm EDT
 
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(Updates with fresh details, comment and closing figures)
    * Canadian dollar at C$1.2693 or 78.78 U.S. cents
    * Bond prices mostly higher across the maturity curve

    By Solarina Ho
    TORONTO, March 30 (Reuters) - The Canadian dollar extended
losses against a rebounding  greenback on Monday, as oil prices
fell and as investors looked ahead to domestic data later this
week.
    Investors are bracing for weak economic growth numbers in
January for Canada due on Tuesday as well as weak trade figures
for February due on Thursday. Markets will also be taking note
of U.S. employment data on Friday. 
    In a Financial Times interview published on Monday, Bank of
Canada governor Stephen Poloz said the first quarter of 2015
will look "atrocious" because of the oil shock, which saw prices
plunge more than 50 percent since last summer. Canada is a major
exporter of crude.
    "With Canada in particular, the market's just a little bit
more nervous with oil pricing as well," said Amo Sahota,
director at Klarity FX in San Francisco.
    "(But) the market is going to be more focused on
data-dependent information, so the GDP will be important for
that. Poloz's comments have really set the tone already."
    The Canadian dollar finished the session at
C$1.2693 to the U.S. dollar, or 78.78 U.S. cents, weaker than
Friday's close of C$1.26, or 79.37 U.S. cents.
    The U.S. dollar gained against a basket of currencies on the
view that the Federal Reserve will hike U.S. interest rates this
year following comments late on Friday from Fed Chair Janet
Yellen. Sahota said the underlying trend of U.S. dollar strength
remained a constant presence.
    The price of crude slipped as six world powers discussed a
possible deal with Iran over its nuclear program. A deal could
bring an end to sanctions and see an increase in Iranian oil
exports that would add to an already well-supplied oil market.
 
    Earlier in the session, U.S. data showed consumer spending
rose negligibly in February, the latest sign that the U.S.
economy has been experiencing a soft first quarter. Meanwhile,
inflation edged higher, but was still below target.
 
    "We still expect it to be a bit on the soft side through the
first half of this year," said Mazen Issa, macro strategist at
TD Securities.
    "Once we get that break higher ... that will give the Fed
more confidence to begin lifting the policy rate."
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year up 2.5 Canadian
cents to yield 0.509 percent. The benchmark 10-year 
was flat, however, yielding 1.376 percent.

 (Editing by Meredith Mazzilli and Diane Craft)