CANADA FX DEBT-C$ extends slide to six-year lows as BoC, data weighs
(Updates throughout; adds fresh comment, details, closing trade levels) * Canadian dollar at C$1.2987 or 77.00 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, July 17 (Reuters) - The Canadian dollar extended its losses against the U.S. dollar on Friday following a slew of economic data that signaled higher U.S. interest rates, while Canada's benchmark rate just dropped. The currency retreated 2.5 percent this week to its weakest level since March 2009. Its biggest dive came on Wednesday after the Bank of Canada announced a 25 basis point rate cut for the second time this year after data showed the economy likely contracted during the first half of the year. "In terms of small moves, the move on Friday is a very impressive one... Any other time, this would be a perfect opportunity to square your positions ahead of weekend," said Adam Button, currency analyst at ForexLive in Montreal. "Yet, there is very little of that taking place in Canadian dollar trading ... Right now you have a perfect storm for the Canadian dollar. The Bank of Canada isn't a one day, or even a two-day event." The loonie finished at C$1.2987 to the U.S. dollar, or 77 U.S. cents, weaker than the Bank of Canada's official close on Thursday of C$1.2970, or 77.10 U.S. cents. On the data front, Canada's annual inflation rate edged up to 1 percent in June, led by higher food prices, but the rate was tempered by cheap energy prices. In the United States, consumer prices rose for a fifth straight month, with gasoline prices contributing to the rise, while housing starts jumped in June and building permits surged to a near eight-year high. The figures were the latest indicators supporting expectations of a rate hike this year by the U.S. Federal Reserve. After the figures were released, the currency dived as low as C$1.3009, or 76.87 U.S. cents. Canadian government bond prices were mixed across the maturity curve, with the two-year price down 3 Canadian cents to yield 0.428 percent and the benchmark 10-year rising 11 Canadian cents to yield 1.567 percent. The Canada-U.S. two-year bond spread was -24.2 basis points, while the 10-year spread was -78 basis points. (Reporting by Solarina Ho; Editing by Peter Galloway and Meredith Mazzilli)
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