CANADA FX DEBT-C$ weakens on lower oil, position squaring ahead of data
(Adds analyst quotes, updates prices) * Canadian dollar ended at C$1.2727, or 78.57 U.S. cents * Bond prices lower across maturity curve By Fergal Smith TORONTO, April 21 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday, pressured by a pullback in oil prices and position squaring ahead of key domestic data. Canada's currency has strengthened 15 percent since falling to a 12-year low in January, helped by the recent rebound in oil prices and the unraveling of expectations for a Bank of Canada interest rate cut. It made a nine-month high on Wednesday at C$1.2593. People are closing out positions before retail sales and inflation data on Friday, said Darren Richardson, senior corporate dealer at CanadianForex. "Just taking profit on this recent loonie strength." U.S. crude prices settled at $43.18 a barrel, down 2.26 percent, after producers from Russia to Saudi Arabia and Iran to Libya hinted at more output amid growing U.S. crude stockpiles. The Canadian dollar closed at C$1.2727 to the greenback, or 78.57 U.S. cents, weaker than Wednesday's close of C$1.2650, or 79.05 U.S. cents. The currency's strongest level of the session was C$1.2628, while its weakest was C$1.2750. There is plenty of room for the loonie to correct further if inflation data is weaker than expected or if oil pullbacks more, said Richardson. On Wednesday, Bank of Canada Governor Stephen Poloz said it could take Canada more than three years to recover from the shock of low oil prices, citing persistently negative factors in its resource-rich economy. Canadian government bond prices were lower across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 0.635 percent and the new benchmark 10-year falling 26 Canadian cents to yield 1.458 percent. The Canada-U.S. 10-year spread was 1.4 basis points less negative at -40.7 basis points, its narrowest gap since Jan. 29 last year. (Reporting by Fergal Smith; Editing by Paul Simao)
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