CANADA FX DEBT-C$ hits lowest this year as oil falls
* Canadian dollar at C$1.3462, or 74.28 U.S. cents * Loonie touches its weakest since Dec. 30 at C$1.3470. * Bond prices lower across a steeper yield curve * 10-year yield touches a 3-week high at 1.800 percent TORONTO, March 8 (Reuters) - The Canadian dollar weakened on Wednesday to a two-month low against its U.S. counterpart as oil prices fell and the greenback gained ground against a basket of major currencies. Gains for the U.S. dollar came as data showed U.S. private employers added 298,000 jobs in February, well above economists' expectations. Stronger-than-expected U.S. payroll numbers, due for release on Friday, could help cement expectations that the Federal Reserve will raise interest rates next week. U.S. crude prices were down 1.45 percent at $52.37 a barrel after an industry report pointed to a large rise in crude inventories in the United States, renewing oversupply concerns despite OPEC output curbs. Oil is one of Canada's major exports. At 9:22 a.m. ET (1422 GMT), the Canadian dollar was trading at C$1.3462 to the greenback, or 74.28 U.S. cents, weaker than Tuesday's close of C$1.3416, or 74.55 U.S. cents. The currency's strongest level of the session was C$1.3398, while it touched its weakest since Dec. 30 at C$1.3470. In domestic data, the seasonally adjusted annualized rate of housing starts rose to 210,207 units from an upwardly revised 208,934 in January, the Canadian Mortgage and Housing Corporation (CMHC) said. Economists had expected starts to decline to 200,000. In addition, the value of building permits rose by 5.4 percent in January from December, and labor productivity rose 0.4 percent in the fourth quarter, data from Statistics Canada showed. Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year fell 5 Canadian cents to yield 0.827 percent, and the 10-year declined 50 Canadian cents to yield 1.798 percent. The 10-year yield touched its highest intraday level since Feb. 15 at 1.800 percent. Canada will release its next federal budget on March 22, the finance minister said on Tuesday, setting the stage for a fresh estimate of how big the deficit will get as the Liberal government spends on infrastructure to boost the economy. Canada's employment report for February is due on Friday. (Reporting by Fergal Smith Editing by W Simon)
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