CANADA FX DEBT-C$ weakens to a 3-day low on lower oil, U.S. jobs data

Fri Apr 1, 2016 9:47am EDT
 
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* Canadian dollar at C$1.3101, or 76.33 U.S. cents
    * Bond prices lower across the maturity curve

    TORONTO, April 1 (Reuters) - The Canadian dollar weakened to
a three-day low against its U.S. counterpart on Friday as crude
oil prices slumped and after stronger-than-expected U.S. jobs
data.        
    U.S. crude prices were down 3.68 percent to $36.93 a
barrel after Saudi Arabia said it will freeze its oil output
only if Iran and other major producers do so. 
    The U.S. dollar extended its gains against the loonie after
the release of solid U.S. employment data that could allow a
cautious Federal Reserve to gradually raise interest rates this
year. 
    At 9:23 a.m. EDT (1323 GMT), the Canadian dollar 
was trading at C$1.3101 to the greenback, or 76.33 U.S. cents,
much weaker than Thursday's close of C$1.2987, or 77.00 U.S.
cents.
    The currency's strongest level of the session was C$1.2969,
while it touched its weakest since at March 29 at C$1.3134.
    However, the loonie ended the first quarter 6.5 percent
higher than at the end of 2015.
    It touched a 5-1/2-month high at C$1.2859 on Thursday after
monthly gross domestic product (GDP) data showed the economy
grew by a much larger-than-expected 0.6 percent in January,
further denting expectations for a for a Bank of Canada rate
cut. 
    The data has led to reassessment by analysts of Canada's
growth outlook.
    BMO Capital Markets has "more than doubled" its
first-quarter growth projection to an annualized 3.3 percent
after the January GDP data, according to a research note on
Friday, much faster than the Bank of Canada's 1 percent
estimate.
    Canada plans to stick with major investment plans included
in last week's budget, regardless of the level of the Canadian
dollar or a pick-up in short-run growth, Finance Minister Bill
Morneau said. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 0.5
Canadian cents to yield 0.542 percent and the benchmark 10-year
 falling 12 Canadian cents to yield 1.238 percent.
    Spreads versus Treasuries were mixed as the U.S. Treasury
curve flattened following the U.S. jobs data.
    The Canada-U.S. two-year bond spread was 2.6 basis points
more negative at -22 basis points. But the 10-year spread
narrowed 2.6 basis points to -53.3 basis points, its least
negative since Oct. 20, as Treasuries outperformed at the
long-end.
    The Bank of Canada will release its business outlook survey
at 10:30 a.m. EDT (1430 GMT).

 (Reporting by Fergal Smith Editing by W Simon)