CANADA FX DEBT-C$ weakens to a one-week low as crude oil prices tumble

Wed Feb 24, 2016 9:41am EST
 
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* Canadian dollar at C$1.3854 or 72.18 U.S. cents
    * Bond prices higher across the maturity curve

    TORONTO, Feb 24 (Reuters) - The Canadian dollar fell to a
one-week low against its U.S. counterpart as crude oil prices
slid and risk appetite deteriorated, while losses were more
pronounced against the safe-haven Japanese yen.
    Oil fell after Saudi Arabia ruled out production cuts and an
industry report said U.S. crude stockpiles hit a record,
underlining the supply glut. 
    U.S. crude prices were down 3.67 percent to $30.70 a
barrel. 
    Global equity markets fell sharply, adding to
headwinds for the risk-sensitive commodity currency.
    Moreover, Canada's second-largest lender by assets showed
increasing signs of pain from the oil price crash and economic
slowdown in Western Canada. 
    At 9:15 a.m. EST (1415 GMT), the Canadian dollar 
was trading at C$1.3854 to the greenback, or 72.18 U.S. cents,
weaker than the Bank of Canada's official close of C$1.3768, or
72.63 U.S. cents.
    The currency's strongest level of the session was C$1.3772,
while it hit its weakest since Feb. 17 at C$1.3860.
    It lost even more ground against the Japanese yen, hitting
its lowest since Feb. 12 at 80.59 yen.            
    Bank of Canada Deputy Governor Lawrence Schembri will
address the topic of elevated household debt and the risk to
financial stability. His speech will be available at 12:35 p.m.
EST (1735 GMT).
    Canada's ruling Liberals will cap the coming year's budget
deficit at C$30 billion ($21.81 billion) as they try to stick to
long-term budget plans, Reuters reported on Tuesday after
speaking with senior government sources. 
    The government said on Monday it will stick to plans to
invest in infrastructure projects. Adding
private-sector investment to projects could spur even greater
spending, reducing the odds of another Bank of Canada rate cut.
    
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 1 Canadian
cent to yield 0.461 percent and the benchmark 10-year
 rising 19 Canadian cents to yield 1.099 percent.
    The Canada-U.S. 10-year spread was 3.5 basis points higher
at -58.9 basis points as Treasuries outperformed on the flight
to safety.
    The Bank of Canada will conduct a C$3.7 billion two-year
auction on behalf of the Government of Canada. The bidding
deadline is 12:00 p.m. EST (1700 GMT).
    Canada's housing market will be a net contributor to
economic growth in the coming year, boosted by rising prices,
but become a drag soon after due to a slowdown in buying and
high levels of household debt, a Reuters poll found.
 

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)