CANADA FX DEBT-C$ steadies after recent losses as oil rises
* Canadian dollar at C$1.2963, or 77.14 U.S. cents * Bond prices slightly higher across the maturity curve TORONTO, May 10 (Reuters) - The Canadian dollar was unchanged against its U.S. counterpart on Tuesday as oil prices rose, while attention turned to when production will be brought back on line in Canada's oil sands region. Oil sands companies are expected to work as quickly as possible to resume wildfire-disrupted production, but face the challenge of staff and suppliers being displaced. About half of the region's crude output, or 1 million barrels per day, has been taken offline, according to a Reuters estimate. Supply disruptions in Canada and elsewhere supported oil prices. U.S. crude was up 0.32 percent to $43.58 a barrel. At 9:26 a.m. EDT (1326 GMT), the Canadian dollar was trading at C$1.2963 to the greenback, or 77.14 U.S. cents, unchanged from Monday's close of C$1.2963, or 77.14 U.S. cents. The currency's strongest level of the session was C$1.2918, while its weakest was C$1.2980. The loonie has fallen 4 percent from a 10-month high hit last week after weaker-than-expected domestic trade data and production cuts in Alberta's oil sands region hurt Canada's economic outlook. It touched a one-month low on Monday of C$1.3016. Economists say second-quarter growth may slow to a standstill, leaving the central bank on hold. It is too early to assess the economic impact of the Alberta wildfire, the Bank of Canada said on Monday, adding that it will have more to say in its interest rate decision later this month. Overnight index swaps imply a 40 percent chance of a rate cut this year, a swing from a 20 percent chance of a hike at the beginning of the month. Canadian government bond prices were slightly higher across the maturity curve, with the two-year price up 2 Canadian cents to yield 0.518 percent and the benchmark 10-year rising 10 Canadian cents to yield 1.308 percent. The Canada-U.S. 2-year spread was 1.5 basis points more negative at -20.1 basis points, its largest gap since April 5, as Canadian government bonds outperformed at the front and in the belly of the curve. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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