CANADA FX DEBT-C$ weakens as oil falls; BOC's Poloz speech awaited

Tue Sep 20, 2016 9:49am EDT
 
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* Canadian dollar at C$1.3236, or 75.55 U.S. cents
    * Bond prices higher across flatter yield curve

    TORONTO, Sept 20 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as oil fell and
investors braced for a speech by Bank of Canada Governor Stephen
Poloz as well as pending Japanese and U.S. central bank monetary
policy decisions.
    The price of U.S. crude was down 1.55 percent to
$42.63 a barrel ahead of an expected build in U.S. crude oil
stocks and on Venezuelan comments that the oil market remains
oversupplied by 10 percent. 
    Investors will be looking to see whether Poloz emphasizes
the downbeat tone of the Canadian central bank's most recent
policy statement. The governor's prepared remarks on the topic
of "Living With Lower for Longer" will be released at 12:35 p.m.
EDT (1635 GMT), followed by a press conference at approximately
2:15 p.m. EDT.
    The U.S. Federal Reserve is due to announce its latest
interest rate decision on Wednesday following a two-day policy
meeting. Fed policymakers also are expected to again cut their
forecasts for how high interest rates will need to go in an
economy where output, productivity and inflation are growing at
a slower pace than in past decades. 
    Meanwhile, the Bank of Japan will undertake a comprehensive
review of its monetary policy at its meeting on Tuesday and
Wednesday amid speculation it may lower short-term interest
rates deeper into negative territory and change its bond
purchasing program. 
    At 9:27 a.m. EDT (1327 GMT), the Canadian dollar 
was trading at C$1.3236 to the greenback, or 75.55 U.S. cents,
weaker than Monday's close of C$1.3207, or 75.72 U.S. cents.
    The currency's strongest level of the session was C$1.3190,
while its weakest level was C$1.3241.
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries as U.S. housing
starts tumbled in August. 
    The two-year bond rose 1.5 Canadian cents to
yield 0.576 percent and the benchmark 10-year 
climbed 32 Canadian cents to yield 1.159 percent.    
    Canadian inflation and retail sales data are due on Friday.
The annual inflation rate is forecast to have edged up to 1.4
percent in August, while investors will be looking for signs
that the federal government's new child benefit checks gave a
boost to retail sales. 

 (Reporting by Fergal Smith; Editing by Paul Simao)