CANADA FX DEBT-C$ weakest in two weeks as Bank of Canada trims growth outlook

Wed Oct 21, 2015 10:58am EDT
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(Updates after Bank of Canada news)
    * Canadian dollar weakens to hit C$1.3116, or 76.24 U.S.
    * Bond prices rise further across the maturity curve after

    By Alastair Sharp
    TORONTO, Oct 21 (Reuters) - The Canadian dollar hit its
weakest level in more than two weeks against its U.S.
counterpart on Wednesday after the Bank of Canada lowered its
growth forecasts for 2016 and 2017.
    The central bank held its key interest rate steady but said
growth would be slower that previously forecast as lower prices
for oil and other commodities was dampening business investment
and exports in the resource sector. 
    The Canadian dollar hit C$1.3116, or 76.24 U.S.
cents, in the minutes after the bank's announcement. It was
trading at C$1.3045, or 76.66 U.S. cents, just before the news,
and had settled on Tuesday at C$1.2982, or 77.03 U.S. cents.
    The push above C$1.31 was the currency's weakest showing
since Oct. 6.
    "The negative implications for the currency is positive for
the Bank of Canada," said Benjamin Tal, a senior economist at
CIBC World Markets. 
    Depreciation could boost exports and equates to a loosening
of monetary policy, helpful for a central bank seen as dovish
but with little room to cut already low borrowing cuts. 
    Canadian government bond prices added to gains across the
maturity curve after the news, with the two-year up 5
Canadian cents to yield 0.546 percent and the benchmark 10-year
 rising 42 Canadian cents to yield 1.494 percent.
    The currency was also pulled lower on the day by a fall in
crude oil prices. U.S. crude prices were down 2.35
percent to $45.20 a barrel, while Brent crude lost 1.66
percent to $47.90. 
    China's benchmark indexes slumped roughly 3 percent on
Wednesday in their worst daily performance in five weeks.

 (Reporting by Alastair Sharp; Editing by Chizu Nomiyama;
Editing by Chizu Nomiyama)