CANADA FX DEBT-C$ weakens to a 1-week low as oil falls after Doha meeting

Mon Apr 18, 2016 10:12am EDT
 
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* Canadian dollar at C$1.2885, or 77.61 U.S. cents
    * Loonie touches its weakest since April 11 at C$1.2990
    * Bond prices slightly lower across the maturity curve

    TORONTO, April 18 (Reuters) - The Canadian dollar weakened
to a one-week low against its U.S. counterpart on Monday as oil
prices fell following a producers' meeting in Doha, although
some losses were pared as falls for stock markets eased.
    A dive in oil prices sent stock markets lower after
producers failed to agree on a plan to curb global supply.
However, falls on European markets eased and Wall Street opened
only modestly lower. 
    U.S. crude prices were down 4.34 percent to $38.61 a
barrel. 
    China reported slower-than-expected first-quarter seasonally
adjusted growth, adding to headwinds for Canada's risk-sensitive
commodity-linked currency. 
    Foreign investors bought a net C$15.94 billion ($12.36
billion) in Canadian securities in February, mainly in bonds,
Statistics Canada said. 
    Bank of Canada Governor Stephen Poloz pushed back on
Saturday at the suggestion the central bank had accepted
economic assumptions from the Department of Finance without
doing due diligence about Finance Minister Bill Morneau's
budget. 
    At 9:35 a.m. EDT (1335 GMT), the Canadian dollar 
was trading at C$1.2885 to the greenback, or 77.61 U.S. cents,
weaker than Friday's close of C$1.2837, or 77.90 U.S. cents.
    The currency's strongest level of the session was C$1.2862,
while it touched its weakest since April 11 at C$1.2990.    
    The loonie hit a nearly nine-month high at C$1.2744 last
week. 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.
 
    Still, the overnight index swaps market has moved to imply a
slight probability of a Bank of Canada interest rate hike this
year after having implied a more than 50 percent probability of
a cut at the start of March. 
    Speculators have increased bullish bets on the loonie,
Commodity Futures Trading Commission data showed on Friday.
    Net long Canadian dollar positions rose to 2,385 contracts
in the week ended April 12 from 97 contracts the prior week. At
the end of January, net short exposure was the highest in five
months at 66,819 contracts. 
    Canadian government bond prices were slightly lower across
the maturity curve, with the two-year price down 0.5
Canadian cent to yield 0.595 percent and the benchmark 10-year
 falling 5 Canadian cents to yield 1.276 percent.
    The Canada-U.S. 10-year spread was 1 basis point more
negative at -49.1 basis points as U.S. Treasuries
underperformed. On Friday, it touched its smallest gap in 10
months at -48.1 basis points.

 (Reporting by Fergal Smith; Editing by Andrea Ricci)