CANADA FX DEBT-C$ weakens as oil slides, manufacturing data disappoints
* Canadian dollar at C$1.2873, or 77.68 U.S. cents * Bond prices higher across the maturity curve TORONTO, April 15 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday as oil prices fell and after a deeper-than-expected drop in Canadian manufacturing shipments. Oil prices slid despite reassuring Chinese data , as analysts said a weekend meeting of major oil exporters would do little to help clear global oversupply. U.S. crude prices were down 2.39 percent to $40.51 a barrel. Factory sales dropped more than expected in February from January, falling 3.3 percent following three straight months of gains, data from Statistics Canada showed. At 9:03 a.m. EDT (1303 GMT), the Canadian dollar was trading at C$1.2873 to the greenback, or 77.68 U.S. cents, weaker than Thursday's close of C$1.2849, or 77.83 U.S. cents. The currency's strongest level of the session was C$1.2798, while its weakest was C$1.2896. The loonie hit a nearly nine-month high at C$1.2744 on Wednesday. However, the central bank warned the same day that the country's improving economy faced downside risks, including a stronger currency that could drag on non-commodity exports, although it held interest rates steady and raised growth forecasts. Still, the implied probability of a Bank of Canada rate cut this year has been reduced to near zero from more than 50 percent at the start of March. Canadian government bond prices were higher across a flatter maturity curve, with the two-year price up 1.5 Canadian cents to yield 0.589 percent and the benchmark 10-year rising 30 Canadian cents to yield 1.262 percent. The Canada-U.S. 10-year spread was 2.4 basis points more negative at -50.9 basis points as Canadian government bonds outperformed. The spread touched -48.5 basis points on Monday and on Thursday, its narrowest gap since May 2015. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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