CANADA FX DEBT-C$ drops as trade data adds to its woes
* Canadian dollar at C$1.1851 or 84.38 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, Jan 7 (Reuters) - The Canadian dollar weakened further against the greenback on Wednesday as a bigger than forecast Canadian trade deficit for November compounded the negative tone that has pervaded the market during the oil-price rout. Canada's trade deficit was C$644 million, sharply higher than the C$300 million that market operators had expected, with exports showing their biggest monthly drop in more than two years, down 3.5 percent. "I think the trade data in general has been receiving a little bit more attention over the past several months just given that it's become such a critical part of the narrative for the Bank of Canada," said Mazen Issa, senior Canada macro strategist at TD Securities. The Bank of Canada, which has repeatedly expressed concern about the struggling export sector, is widely expected to keep interest rates on hold until after the U.S. Federal Reserve makes a move on rates. Canada's economic recovery has been lagging that of the United States. The Canadian dollar was trading at C$1.1851 to the greenback, or 84.38 U.S. cents, weaker than Tuesday's finish of C$1.1828, or 84.55 U.S. cents. The currency has been hitting its weakest levels in more than 5-1/2 years. "There's just a lot of forces going on in the market place right now and it generally has a negative tone to it...a higher USD/CAD is probably the path of least resistance from this point on," Issa said. Battered oil prices were steady on Wednesday after losing some 10 percent just this week, but U.S. crude remained around $48.50 a barrel after having fallen below $47 earlier. Canada is a major exporter of the commodity and the Canadian dollar's retreat has largely shadowed that of oil prices. Canadian government bond prices were mixed across the maturity curve, with longer-term securities falling. The two-year bond was down 3 Canadian cents to yield 0.97 percent and the benchmark 10-year bond was off 25 Canadian cents to yield 1.665 percent. (Reporting by Solarina Ho; Editing by Peter Galloway)
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