CANADA FX DEBT-C$ slides alongside oil as crude inventories surge

Wed Apr 8, 2015 5:23pm EDT
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(Adds more information, comment, closing figures)
    * Canadian dollar at C$1.2538 or 79.76 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, April 8 (Reuters) - The Canadian dollar retreated
against its U.S. counterpart on Wednesday, tracking oil prices
that tanked following an enormous rise in U.S. crude stocks.
    Crude inventories soared three times more than expected, to
more than 10 million barrels, hitting a record 482.39 million
last week, according to government data. The price of crude, a
major Canadian export, tumbled more than six percent after
hitting 2015 highs in the previous session. 
    "It's all oil prices today," said Benjamin Reitzes, senior
economist and foreign exchange strategist at BMO Capital
Markets. "Prices dropped and the Canadian dollar weakened right
along with them."
    Crude was already under pressure prior to the U.S. data on
news that Saudi Arabia's monthly oil production hit a record.
    The Canadian dollar finished the session at
C$1.2538 to the greenback, or 79.76 U.S. cents, weaker than the
Bank of Canada's official close on Tuesday of C$1.2504, or 79.97
U.S. cents. Earlier in the session, the loonie touched C$1.2388
before retreating.
    The currency was also hampered by a stronger U.S. dollar,
which rose for the third straight session. It strengthened after
Federal Reserve minutes showed policy makers were set for a
likely interest rate increase this year. The central bank will
be closely watching economic data to gauge exactly when the next
rise will take place. 
    Expectations of a June increase have been tempered following
a dismal jobs report for March.
    "You'd have to think that, if anybody was on the fence,
those folks saying a June move was possible, that the weaker
payroll number probably would've pushed them a little bit toward
September," said Reitzes.
    With little else on the domestic economic calendar until
Friday's Canadian employment figures for March, currency
direction will likely continue to be driven by crude prices and
U.S. dollar moves.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 1
Canadian cent to yield 0.506 percent and the benchmark 10-year
 edging up 2 Canadian cents to yield 1.342 percent. 
    The Canada-U.S. two-year bond spread stood at -3.00, while
the 10-year spread was -56.4.

 (Reporting by Solarina Ho; Editing by Peter Galloway and Andre