CANADA FX DEBT-C$ weakens to a one-week low as oil falls, greenback strengthens

Wed Mar 23, 2016 9:26am EDT
 
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* Canadian dollar at C$1.3141, or 76.10 U.S. cents
    * Bond prices mixed across flatter maturity curve

    TORONTO, March 23 (Reuters) - The Canadian dollar weakened
to a one-week low against its U.S. counterpart on Wednesday as
crude oil prices fell, while the market reassessed the potential
for Federal Reserve rate hikes.
    Oil prices eased after figures from an industry group showed
U.S. crude stockpiles rose last week by more than expected,
reinforcing concerns that a global glut continues unabated.
 
    U.S. crude prices were down 1.91 percent to $40.66 a
barrel.
    The greenback strengthened against a basket of major
currencies, supported by hawkish comments from Federal Reserve
officials. 
    Tuesday's federal budget had little impact on the Canadian
dollar.
    The new Liberal government said in a bid to revive growth it
would run a C$29.4 billion deficit for fiscal 2016-17, close to
market expectations.
    The Bank of Canada has said it will incorporate the fiscal
measures into its April projection.
    The implied probability of a rate cut by year end has
dropped to less than 20 percent from 87 percent a little more
than one month ago. 
    At 9:14 a.m. EDT (1314 GMT), the Canadian dollar 
was trading at C$1.3141 to the greenback, or 76.10 U.S. cents,
weaker than Tuesday's official close of C$1.3035, or 76.72 U.S.
cents.
    The currency's strongest level of the session was C$1.3038,
while it touched its weakest since March 16 at C$1.3151.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price flat to yield
0.585 percent and the benchmark 10-year rising 21
Canadian cents to yield 1.308 percent.
    The curve flattened, as the spread between the 2-year and
10-year yields narrowed by 2 basis points to 72.3 basis points,
indicating outperformance for longer-dated maturities.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)