CANADA FX DEBT-C$ weakens to 7-week low as oil falls

Fri Sep 16, 2016 5:11pm EDT
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(Adds analyst quotes and details on CFTC data, U.S. election
and Mexican peso, updates prices)
    * Canadian dollar closes at C$1.3214, or 75.68 U.S. cents
    * Loonie touches its weakest since July 27 at C$1.3248
    * Bond prices mixed across flatter yield curve

    By Fergal Smith
    TORONTO, Sept 16 (Reuters) - The Canadian dollar weakened to
set a seven-week low against its U.S. counterpart on Friday as
oil fell, while hotter-than-expected U.S. inflation and recent
tightening of the U.S. presidential election race supported the
    U.S. crude oil futures settled 88 cents lower at $43.03 a
barrel as swelling Iranian exports reinforced fears of a global
    The U.S. dollar rose against a basket of major
currencies as U.S. consumer prices increased more than expected
in August, pointing to a steady build-up of inflation that could
allow the Federal Reserve to raise interest rates this year.
    Increased probability that Republican candidate Donald Trump
will win the U.S. presidential election added to support for the
greenback, said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets.
    Trump has proposed a discounted 10 percent levy for
businesses that bring back profits held overseas.
    The repatriation proposal "would bring a wall of money back
into the U.S. from abroad in 2017," Anderson said, adding that a
Republican-appointed Federal Open Market Committee would
probably be more hawkish than a Democratic appointed FOMC.    
    Canadian manufacturing sales edged up 0.1 percent in July
from June. The gain was well below the 1 percent rise forecast
by analysts in a Reuters poll. 
    The Canadian dollar closed at C$1.3214 to the
greenback, or 75.68 U.S. cents, weaker than Thursday's close of
C$1.3160, or 75.99 U.S. cents.
    The currency's strongest level of the session was C$1.3143,
while it touched its weakest since July 27 at C$1.3248.
    For the week, the loonie lost 1.3 percent.
    Losses for Mexico's peso, however, were even greater, with
the peso hitting an historic low of 14.9638 per Canadian dollar
    The peso's plunge is seen putting further pressure on
Canadian exporters, who have struggled with weak growth this
    Speculators pared bullish bets on the Canadian dollar for
the second straight week, Commodity Futures Trading Commission
data showed. Net long Canadian dollar positions dipped to 17,058
contracts in the week ended Sept. 13 from 20,905 contracts in
the prior week.   
    Canadian government bond prices were mixed as the yield
curve flattened in sympathy with U.S. Treasuries. The two-year
 bond dipped 1 Canadian cent to yield 0.581 percent
and the benchmark 10-year rose 7 Canadian cents to
yield 1.19 percent.
    Foreign investment in Canadian securities slowed in July for
the fourth straight month. 

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama and Dan