CANADA FX DEBT-C$ weakens as wildfire threatens oil sands facilities

Wed May 18, 2016 9:41am EDT
 
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* Canadian dollar at C$1.2977, or 77.06 U.S. cents
    * Bond prices slightly lower across the maturity curve

    TORONTO, May 18 (Reuters) - The Canadian dollar weakened
against its broadly firmer U.S. counterpart on Wednesday as a
wildfire threatened oil sands facilities in Alberta, while
global oil prices seesawed.
    Hot and dry weather and strong winds were expected to push a
massive wildfire near Fort McMurray, Alberta eastward on
Wednesday, threatening facilities and work camps in the prized
oil sands region.
    Economists had already been expecting a sharp slowdown in
Canada's economy after a strong start to 2016. 
    Lengthening the timeline for oil production to return to
normal levels could add downside risk to the outlook, according
to a research note on Wednesday from BMO Capital Markets, which
projects flat growth in the second quarter.
    Global oil prices seesawed after hitting 2016 highs in the
previous session, as the impact of unplanned supply disruptions
in Nigeria and Canada was tempered by rising supplies elsewhere.
U.S. crude prices were up 0.08 percent to $48.35 a
barrel.
    The U.S. dollar rose to a three-week high against a basket
of major currencies after Federal Reserve officials on Tuesday
played up chances of interest rate hikes this year. The focus
now turns to the minutes from the last Federal Open Market
Committee later on Wednesday.
    At 9:25 a.m. EDT (1325 GMT), the Canadian dollar 
was trading at C$1.2977 to the greenback, or 77.06 U.S. cents,
weaker than Tuesday's close of C$1.2903, or 77.50 U.S. cents.
    The currency's strongest level of the session was C$1.2903,
while its weakest was C$1.2994. Last week it touched C$1.3016,
its weakest in one month.
    Foreign investment in Canadian securities climbed for a
third straight month as foreigners bought a net C$17.17 billion
($13.25 billion) worth of securities in March, mainly in bonds,
Statistics Canada said. 
    Canadian government bond prices were slightly lower across
the maturity curve in sympathy with U.S. Treasuries. The
two-year price fell 4 Canadian cents to yield 0.607
percent, and the benchmark 10-year declined 5
Canadian cents to yield 1.324 percent.
    The Canada-U.S. 10-year spread was 2.7 basis points more
negative at -46.7 basis points, its largest gap since April 18.
    Investors are awaiting Canadian wholesale trade for March,
set for release on Thursday, while Canada's March retail sales
data and April inflation data are due on Friday. 

 (Reporting by Fergal Smith Editing by W Simon)