CANADA FX DEBT-C$ strengthens as focus shifts to oil sands restarts

Wed May 11, 2016 9:54am EDT
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* Canadian dollar at C$1.2883, or 77.62 U.S. cents
    * Bond prices slightly higher across the maturity curve

    TORONTO, May 11 (Reuters) - The Canadian dollar strengthened
to a five-day high against its U.S. counterpart on Wednesday as
attention shifted to restarting production in Alberta's oil
sands, although some gains for the currency were pared as oil
turned lower.     
    Production in much of the oil sands region should ramp up
soon, top provincial and industry officials said on Tuesday as a
wildfire threat eased. 
    Roughly 1 million barrels per day of output has been lost to
the fire, about half of the oil sands' usual daily production.
    The loss of production has weighed on Canada's economic
outlook. Economists say second-quarter growth may slow to a
standstill, leaving the central bank on hold. 
    Gains for the loonie came as Canada's InnVest Real Estate
Investment said that it has entered into an agreement
to be bought by Bluesky Hotels and Resorts in a transaction that
values InnVest at $2.1 billion, including debt. 
    Oil prices turned lower after rising earlier as worries
about supply disruptions resurfaced. U.S. crude prices
were down 0.56 percent to $44.41 a barrel. 
    At 9:39 a.m. EDT (1339 GMT), the Canadian dollar 
was trading at C$1.2883 to the greenback, or 77.62 U.S. cents,
stronger than Tuesday's close of C$1.2916, or 77.42 U.S. cents.
    The currency's weakest level was C$1.2942, while it touched
its strongest since May 6 of C$1.2868.
    It hit on Monday its weakest in one month of C$1.3016.
    Bank of Canada Senior Deputy Governor Carolyn Wilkins said
the focus is on downside risks to the economy, because there
seems to be so many of them. Wilkins was participating in a
panel discussion on "The Changing Global Bond Market and
Implications for Investors."
    Canadian government bond prices were slightly higher across
the maturity curve, with the two-year price up 0.5
Canadian cent to yield 0.526 percent and the benchmark 10-year
 rising 7 Canadian cents to yield 1.308 percent.
    The Canada-U.S. 10-year spread was 0.6 of a basis point more
negative at -45 basis points, its biggest gap since April 19, as
Canadian government bonds outperformed.    

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama)