CANADA FX DEBT-C$ stabilizes ahead of mid-week rate decision, hits fresh 12-yr low

Mon Jan 18, 2016 9:43am EST
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* Canadian dollar at C$1.4530 or 68.82 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, Jan 18 (Reuters) - The Canadian dollar stabilized
against its U.S. counterpart on Monday, but only after tumbling
to a fresh 12-year low as crude oil prices remained fragile and
the market braced for a potential rate cut on Wednesday from the
Bank of Canada.
    The currency fell 2.5 percent last week, with the sell-off
for the risk-sensitive commodity currency gaining additional
traction on Friday as Wall Street tumbled to its lowest level
since October 2014. 
    Oil prices hit their lowest level since 2003 as the market
braced for additional Iranian exports after the lifting of
sanctions against the country over the weekend. 
    U.S. crude prices were down 1.16 percent to $29.08 a
barrel, while Brent crude lost 0.69 percent to
    The implied probability of a Bank of Canada rate cut on
Wednesday was 64 percent, little changed from Friday. The market
has fully discounted a rate cut by April and it has implied a
one-third chance of an additional rate cut by the end of the
    However, some economists believe that the Canadian dollar's
sharp fall may forestall a rate cut. 
    At 9:20 a.m. EST (1420 GMT), the Canadian dollar 
was trading at C$1.4530 to the greenback, or 68.82 U.S. cents,
matching the Bank of Canada's official close on Friday.
    The currency's strongest level of the session was C$1.4487,
while it hit its weakest level since April 2003 at C$1.4650.    
    Canadian government bond prices were mixed across the
maturity curve, mostly trading in a narrow range with U.S.
markets closed for the Martin Luther King Day holiday.
    The two-year price was down 0.5 Canadian cent to
yield 0.29 percent and the benchmark 10-year rose 6
Canadian cents to yield 1.145 percent. The 10-year yield hit a
new record low on Friday at 1.143 percent.

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama)