CANADA FX DEBT-C$ climbs as oil price, Canadian home sales rise

Mon May 16, 2016 9:54am EDT
 
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* Canadian dollar at C$1.2908, or 77.47 U.S. cents
    * Bond prices lower across the maturity curve

    TORONTO, May 16 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Monday as oil rallied to new
2016 highs and after Canadian home sales rose in April to their
highest level ever.
    Supportive of the commodity-linked currency, oil prices rose
amid increasing output disruptions in Nigeria and after Goldman
Sachs said a near-two-year glut in the market had ended and
flipped to a deficit. U.S. crude prices were up 2.64
percent at $47.43 a barrel. 
    Sales of existing Canadian homes rose 3.1 percent in April
from March, a report from the Canadian Real Estate Association
showed.    
    At 9:22 a.m. EDT (1322 GMT), the Canadian dollar 
was trading at C$1.2908 to the greenback, or 77.47 U.S. cents,
stronger than Friday's close of C$1.2935, or 77.31 U.S. cents.
    The currency's strongest level of the session was C$1.2902,
while it touched its weakest since May 10 of C$1.2961.
    Last week, the loonie hit its weakest in one month of
C$1.3016. News from Alberta, where some production had restarted
at oil sands facilities following a wildfire, was offset by
stronger-than-expected U.S. retail sales data and hawkish
comments by U.S. Federal Reserve officials.
    Still speculators have increased bullish bets on the loonie,
Commodity Futures Trading Commission data showed. Net long
Canadian dollar positions rose to 25,874 contracts in the week
ended May 10 from 18,943 contracts in the prior week.
 
    China's investment, factory output and retail sales all grew
more slowly than expected in April, adding to doubts about
whether the world's second-largest economy is stabilizing.
 China is one of the biggest customers for Canada's
commodity exports.     
    Canadian Prime Minister Justin Trudeau praised firefighters
on Friday for defending the energy hub of Fort McMurray and
promised the federal government would pour money in to its
recovery. 
    Canadian government bond prices were lower across the
maturity curve in sympathy with U.S. Treasuries. The two-year
 price fell 2.5 Canadian cents to yield 0.564 percent
and the benchmark 10-year declined 14 Canadian cents
to yield 1.291 percent. The 10-year yield hit its lowest on
Friday in more than three weeks at 1.265 percent.
    The Canada-U.S. two-year bond spread was 0.8 of a basis
points more negative at -21.1 basis points, its largest gap
since April 1, as U.S. Treasuries underperformed.
    Canadian manufacturing, wholesale trade and retail sales
data for March and inflation data for April are awaited this
week. 

 (Reporting by Fergal Smith; Editing by Bernadette Baum)