CANADA FX DEBT-C$ slips as oil reverses course; factory sales up

Tue Feb 16, 2016 4:50pm EST
 
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(Adds currency salesman comment; updates prices to close)
    * Canadian dollar ends at C$1.3881, or 72.04 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, Feb 16 (Reuters) - The Canadian dollar ended
slightly weaker against its broadly stronger U.S. counterpart on
Tuesday after hitting a 12-day high, losing ground as oil prices
reversed gains.
    The loonie, as Canada's currency is colloquially known, had
initially gained, helped by rising global oil prices and
higher-than-expected factory sales.
    But crude prices fell after top producers Saudi Arabia and
Russia agreed only to freeze output at January levels, and only
with agreement from other major exporters.  
    "You don't have Iran or Iraq at the table, it's going to be
difficult to get Iran to agree to any sort of cutback when
they're just coming back on board after such a long time," said
Don Mikolich, executive director for foreign exchange sales at
CIBC Capital Markets.
    Still, he said, the currency was showing signs of resilience
given it was much weaker when oil was at similar levels a month
ago. 
    The Canadian dollar ended the session trading at
C$1.3881 to the greenback, or 72.04 U.S. cents, weaker than
Friday's official close of C$1.3861, or 72.14 U.S. cents.
    The currency was little traded during public holidays in
both Canada and the United States on Monday.
    The currency touched its strongest level since Feb 4. at
C$1.3707, while its weakest level was C$1.3840.
    Canadian factory sales rose 1.2 percent in December from
November on gains for motor vehicles and wood products, data
from Statistics Canada showed on Tuesday. 
    In other domestic data, sales of existing homes in Canada
rebounded 0.5 percent in January from December as strong demand
in Toronto and Vancouver offset declines in Calgary and
Edmonton, a report from the Canadian Real Estate Association
showed. 
    Bearish bets by speculators against the Canadian dollar were
trimmed slightly more after reaching five-month highs in
January. 
    Net short Canadian dollar positions decreased to 51,935
contracts in the week ended Feb. 9 from 52,420 in the prior
week, Commodity Futures Trading Commission data showed on
Friday. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down half a
Canadian cent to yield 0.462 percent and the benchmark 10-year
 falling 23 Canadian cents to yield 1.159 percent.
    The 10-year yield touched a record low of 0.921 percent on
Feb. 11 amid a flight to safety.

 (Additional reporting by Fergal Smith; Editing by W Simon and
Leslie Adler)