CANADA FX DEBT-C$ weakens to more than 3-week low as oil falls

Tue Oct 27, 2015 4:53pm EDT
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* Canadian dollar at C$1.3266, or 75.38 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds details, quotes, updates prices)
    TORONTO/OTTAWA, Oct 27 (Reuters) - The Canadian dollar
weakened against the greenback on Tuesday, hitting its lowest
level in more than three weeks as the commodity-sensitive
currency was stung by a further fall in oil prices.
    Some weak U.S. economic data, including a drop in the gauge
of business plans, also took some steam out of the loonie. The
United States is Canada's biggest trading partner by far and
policymakers are looking for a pickup south of the border to
help support Canada's economy. 
    The day's drop saw the Canadian dollar breach resistance
around the C$1.32 level. U.S. crude prices settled down
78 cents to $43.20 a barrel amid a persistent global supply
    There has been "a pretty material decline in oil the last
couple days," said Don Mikolich, executive director of foreign
exchange sales at CIBC World Markets. "We keep holding up $40 as
a bit of a bottom there, but it certainly has dragged the
Canadian dollar down with it."
    The Canadian dollar ended the North American
trading session at C$1.3266 to the greenback, or 75.38 U.S.
cents, weaker than Tuesday's close of C$1.3163, or 75.97 U.S.
    Markets were also turning their attention to the U.S.
Federal Reserve's interest rate decision on Wednesday. While the
central bank is expected to hold rates steady, investors will be
looking for any clues as to whether the Fed will still begin
hiking rates this year as it had planned. 
    "We'll see what kind of tone comes from the Fed announcement
tomorrow and I think that will set direction for the next couple
of months," said Mikolich.
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 5 Canadian
cents to yield 0.493 percent and the benchmark 10-year
 rising 23 Canadian cents to yield 1.418 percent.
    The Canada-U.S. two-year bond spread was -11.9 basis points,
while the 10-year spread was -61.5 basis points.

 (Reporting by Alastair Sharp and Leah Schnurr; Editing by Alan