CANADA FX DEBT-C$ squeezed by Bank of Canada, record oil stocks
(Adds fresh comments, details and closing prices) * Canadian dollar ends at C$1.2641 or 79.11 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, Feb 11 (Reuters) - The Canadian dollar extended its previous session's losses against the U.S. dollar on Wednesday, as softer crude prices and a dovish Bank of Canada remained the driving themes behind the currency's weakness. Record high U.S. crude stocks pushed crude prices down as much as 3 percent during the session. Oil has plunged more than 50 percent since last June on lukewarm demand and massive global supplies. Remarks by the Bank of Canada, the first since the central bank confounded markets with a 25 basis point interest rate cut last month, also contributed to the currency's retreat. Bank of Canada Governor Stephen Poloz said on Tuesday that he has not been talking down the Canadian dollar and that the weakness was due to economic developments like cheap crude, while Senior Deputy Governor Carolyn Wilkins said the Canadian economy was still operating below its potential. "Yesterday's commentary by both Governor Poloz and then by Wilkins were quite key in keeping the Canadian dollar on the backfoot," said Amo Sahota, director at Klarity FX in San Francisco. "We're keeping a really close eye on what the probability of an interest rate cut looks like for the Bank of Canada at the next meeting." The loonie has fallen more than 8 percent so far this year, touching levels not seen in nearly six years as diverging monetary policies between the Bank of Canada and the U.S. Federal Reserve and low oil prices continue to hurt the crude-exporting country. The market is currently pricing in a 74 percent chance of another rate cut in March. The Canadian dollar closed at C$1.2641 to the U.S. dollar, or 79.11 U.S. cents, softer than Tuesday's finish at C$1.2574, or 79.53 U.S. cents. "It's a pretty light weak for data ... so the currency's at the beck and call of what the broader U.S. dollar is doing to some extent as well," said David Bradley, director of foreign exchange trading at Scotiabank. Both Bradley and Sahota noted that markets were also keeping an eye on other commodities beyond oil as well. Like oil, copper prices has also been searching for a bottom after hitting 5-1/2 year lows last month. Canadian government bond prices were mixed across the maturity curve, with longer term securities falling. The two-year slipped 2 Canadian cents to yield 0.437 percent, while the benchmark 10-year fell 14 Canadian cents to yield 1.440 percent. (Reporting by Solarina Ho; Editing by Meredith Mazzilli and Tom Brown)
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