CANADA FX DEBT-C$ weakens as oil falls on deal doubt; data awaited

Mon Apr 4, 2016 4:37pm EDT
 
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(Adds strategist comment, updates prices to close)
    * Canadian dollar ends at C$1.3072, or 76.50 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, April 4 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as oil fell on doubts a
deal will be reached to cut output, although the currency traded
in a narrow range as the market braced for trade and employment
data later in the week.    
    The currency has consolidated recent strength since touching
a 5-1/2-month high at C$1.2859 on Thursday, when stronger than
expected economic growth in January further dented expectations
for a Bank of Canada rate cut. 
    Oil prices dipped as investors ditched some of their bullish
bets on another price rise and the chances that top exporters
will agree to rein in overproduction appeared to fade.
 
    "The Canadian dollar is a crude-sensitive currency and it is
certainly at the mercy of rhetoric from the Saudis and whether
they will potentially reach consensus on a production cut," said
Dean Popplewell, chief currency strategist at OANDA, referring
to a scheduled April 17 meeting between oil producers.
    But while he pointed to short-term loonie weakness, he said
the Canadian currency could gain in the longer term as investors
further unwind bets on rate hikes at the U.S. Federal Reserve.
    Fed Chair Janet Yellen said last week the central bank would
proceed cautiously in raising rates, in contrast to more hawkish
comments from other Fed officials. The apparent lack of unison
has left investors uncertain in an environment of mixed economic
data.
    Canadian trade data for February is due on Tuesday, with
economists watching for further strength in the export sector.
The March unemployment report is due at the end of the week.
 
    The Canadian dollar settled at C$1.3072 to the
greenback, or 76.50 U.S. cents, weaker than Friday's close of
C$1.3014, or 76.84 U.S. cents.
    The currency's strongest level of the session was C$1.3003,
while its weakest was C$1.3082.
    Speculators further cut bearish bets on the Canadian dollar
from extreme levels seen in January, Commodity Futures Trading
Commision (CFTC) data showed on Friday.
    Net short Canadian dollar positions fell to 6,180 contracts
in the week ended March 29 from 15,009 in the prior week.
        
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down half a
Canadian cent to yield 0.547 percent and the benchmark 10-year
 down 7 Canadian cents to yield 1.231 percent.   

 (Additional Reporting by Fergal Smith; Editing by Nick
Zieminski and Sandra Maler)