CANADA FX DEBT-C$ strengthens to nearly 5-mth high as greenback tumbles, oil rallies

Thu Mar 17, 2016 9:46am EDT
 
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* Canadian dollar at C$1.3000, or 76.92 U.S. cents
    * The currency touched its strongest since Oct. 20 at
C$1.2946.
    * Bond prices higher across the maturity curve

    TORONTO, March 17 (Reuters) - The Canadian dollar
strengthened to a nearly five-month high against its U.S.
counterpart on Thursday as expectations for Federal Reserve rate
hikes were scaled back and the oil market rally extended
further.
    The U.S. dollar tumbled against a basket of major
currencies after the Federal Reserve said on Wednesday it now
expects just two quarter-point rate hikes this year, not four.
 
    Oil prices rose, bolstered by a plan among some of the
world's biggest producers to meet next month to discuss
supporting the market. 
    U.S. crude prices were up 2.47 percent to $39.41 a
barrel.
    At 9:14 a.m. EDT (1314 GMT), the Canadian dollar 
was trading at C$1.3000 to the greenback, or 76.92 U.S. cents,
stronger than Wednesday's close of C$1.3122, or 76.21 U.S.
cents.
    The currency's weakest level of the session was C$1.3133,
while it touched its strongest since Oct. 20 at C$1.2946.       
    The value of Canadian wholesale trade remained unchanged in
January from December, data from Statistics Canada showed. The
reading was slightly below expectations for a 0.2 percent
increase after a revised 1.8 percent gain in December.
 
    However, it follows Canadian manufacturing data on Wednesday
 which showed strength that caught the market's
attention.
    Canadian government bond prices were slightly higher across
the maturity curve in sympathy with U.S. Treasuries.
    The two-year price rose 0.5 Canadian cent to
yield 0.532 percent and the benchmark 10-year was up
5 Canadian cents to yield 1.295 percent.
    The Canada-U.S. two-year bond spread was 1 basis point less
negative at -32.7 basis points, while the 10-year spread was 3.3
basis points less negative at -60.4 basis points as Treasuries
outperformed.
    Quebec Finance Minister Carlos Leitao will present the
province's 2016-17 budget this afternoon, which is expected to
be balanced. 

 (Reporting by Fergal Smith; Editing by Andrea Ricci)