CANADA FX DEBT-C$ flat versus US$, further weakness eyed
* C$ at C$1.3248, or 75.48 U.S. cents * Bond prices lower across maturity curve By Alastair Sharp TORONTO, Sept 10 (Reuters) - The Canadian dollar was flat versus its U.S. counterpart on Thursday as domestic data showed industrial capacity use fell for a second straight quarter with low oil prices and a slower economy expected to weigh on the currency in coming weeks. At 9:21 a.m. ET (1321 GMT), the Canadian dollar was trading at C$1.3248 to the greenback, or 75.48 U.S. cents, compared to the Bank of Canada's official Wednesday close of C$1.3250, or 75.47 U.S. cents. "The price (of oil) has been drifting lower ... that's encouraged dollar/Canada to squeeze up through C$1.32," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets. U.S. crude prices were up 1 percent to $44.62 a barrel, while Brent crude added 0.7 percent to $47.91 a barrel. Brent had reached $54 in late August, while U.S. crude approached $50 at the same time. Stretch said further weakness likely lies ahead for the Canadian currency, with C$1.35 a possibility by year-end. "If you look at the monetary policy differentials - we're still of the view that the Fed will go next week - inherent political risk into the upcoming election, and the growth differentials ... I'd still be biased towards a higher dollar/Canada," he said. Canadian government bond prices were lower across the maturity curve, with the two-year price down half a Canadian cent to yield 0.459 percent and the benchmark 10-year falling 6 Canadian cents to yield 1.497 percent. The Canada-U.S. two-year bond spread was -28.2 basis points, while the 10-year spread was -70.9 basis points. (Editing by Nick Zieminski)
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