CANADA FX DEBT-C$ rises to highest level of the week as oil rallies

Wed May 11, 2016 4:30pm EDT
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* Canadian dollar at C$1.2851,or 77.81 U.S. cents
    * Bond prices mixed across the maturity curve

 (Adds details, quotes, updates prices)
    TORONTO/OTTAWA, May 11 (Reuters) - The Canadian dollar
strengthened against the greenback to its highest level of the
week on Wednesday as energy prices rallied and investors
consolidated after a recent rapid decline.     
    Oil jumped after U.S. crude inventories unexpectedly fell
for the first time since March. U.S. crude prices ended
up $1.57 at $46.23 a barrel. 
    The gains in oil helped the commodity-sensitive currency
rise for the second day in a row after tumbling at the start of
the month. Still, that decline gave back only a small part of
the about 14 percent gain it made between late January and the
end of April.
    In a quiet week for domestic data and without any other
major catalysts, the Canadian dollar will likely stick to a
well-worn range of C$1.28 to C$1.3050, said Don Mikolich,
executive director of foreign exchange sales at CIBC Capital
    "In U.S. dollar-Canadian dollar, it felt we had exhausted
the move to the top side until we see further data," said
    The Canadian dollar ended the North American
trading session at C$1.2851 to the greenback, or 77.81 U.S.
cents, stronger than Tuesday's close of C$1.2916, or 77.42 U.S.
    The currency touched a high of C$1.2829, its highest since
May 5.
    Attention was also shifting to restarting production in
Alberta's oil sands. Workers for one of the largest oil sands
companies affected by the wildfire will begin returning to
facilities on Thursday, the latest sign that production was
slowly coming back online. 
    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. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price off 1.5
Canadian cents to yield 0.537 percent and the benchmark 10-year
 up 18 Canadian cents to yield 1.297 percent.

 (Reporting by Fergal Smith in Toronto and Leah Schnurr in
Ottawa; Editing by James Dalgleish)