CANADA FX DEBT-C$ weakest close in five years as Bank of Canada eyes risks
(Adds closing figures, fresh comment, details) * Canadian dollar at C$1.1357 or 88.05 U.S. cents * Bond prices higher across the maturity curve By Solarina Ho TORONTO, Nov 3 (Reuters) - The Canadian dollar softened to its weakest close in more than five years against its U.S. counterpart on Monday, as investors piled into the U.S. dollar and Bank of Canada Governor Stephen Poloz presented a gloomier tone on the economy. In his first speech and press conference since the central bank's quarterly Monetary Policy Report a week and a half ago, Poloz expressed more concern over the risk of weaker-than-expected inflation and soft growth than a jump in both, saying upside surprises would be easier to manage. "A predictably dovish statement. So I don't think there was any kind of new news. But it kind of reinforced the cautious tone we've been hearing from the Bank," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets. The Canadian dollar, underperforming most other major currencies, closed the session at C$1.1357 to the greenback, or 88.05 U.S. cents, sharply softer than Friday's close of C$1.1286, or 88.61 U.S. cents. While it did not break a recent low of C$1.13 during the session, it was the currency's weakest close since July, 2009. "This move into the (C$1.13s) has been sort of expected," said Mikolich. "Just a variety of things that weren't Canada supportive ... The market seems to be building new U.S. dollar long positions." Oil prices tumbled by as much as $2 a barrel, hitting the lowest since mid-2012 in New York. U.S. manufacturing activity unexpectedly accelerated in October and automobile sales were strong, easing concerns of a significant moderation in economic growth in the fourth quarter. A slew of economic data, especially from the United States, is expected this week, culminating in monthly job reports on both sides of the border. "I think the theme of a weaker Canadian dollar has been firmly entrenched now," said Mazen Issa, senior Canada macro strategist at TD Securities. "Over the course of the week, there are enough event risks that would provide scope for volatility." The federal government will also provide its fiscal update this month, Finance Minister Joe Oliver said on Twitter on Sunday. Canadian government bond prices were higher across the maturity curve, with the two-year bond rising 6.5 Canadian cents to yield 0.992 percent, and the benchmark 10-year climbing 6 Canadian cents to yield 2.041 percent. (Editing by Peter Galloway and Dan Grebler)
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