CANADA FX DEBT-C$ rises as firmer oil prices provide relief

Wed Dec 9, 2015 9:43am EST
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* Canadian dollar at C$1.3553 or 73.78 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, Dec 9 (Reuters) - The Canadian dollar edged higher
against the U.S. dollar on Wednesday, helped by a bounce in
crude oil prices, while extending recent losses against the
    Oil prices rose on strong Japanese economic data and lower
crude oil storage figures from the United States, but many
investors expected prices to fall below 2008 lows due to a
mounting global supply glut.    
    U.S. crude prices were up 0.85 percent to $37.83 a
barrel, while Brent crude added 0.45 percent to
    China's consumer inflation picked up slightly in November,
providing an upside surprise. The report followed
sluggish Chinese trade data on Tuesday that fed concern about
slower global growth.
    At 9:11 a.m. EST (1411 GMT), the Canadian dollar 
was trading at C$1.3553 to the greenback, or 73.78 U.S. cents,
stronger than the Bank of Canada's official close of C$1.3587,
or 73.60 U.S. cents.
    The currency's strongest level of the session was C$1.3544,
while its weakest level was C$1.3608.
    Against euro, the Canadian dollar weakened to C$1.4866,
having hit its weakest level in nearly seven weeks at C$1.4906
following last week's unexpectedly cautious policy moves by the
European Central Bank.    
    The Canadian dollar had weakened to a fresh 11-year low
against the greenback on Tuesday at C$1.3623, as a slump in
crude oil prices to 2009 levels raised the prospect Canada's
central bank might have to take further accommodative measures. 
    Bank of Canada Governor Stephen Poloz said on Tuesday that
rates could be pushed into negative territory if warranted, but
the overall tone of the speech was not as dovish as some had
expected following the plunge in crude oil prices, according to
a research note from RBC Capital Markets.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price flat to yield
0.567 percent and the benchmark 10-year falling 2
Canadian cents to yield 1.507 percent.
    The Canada-U.S. two-year bond spread was 1 basis point
narrower at -36.7 basis points, while the 10-year spread was
also 1 basis point narrower at -72.3 basis points, trimming
recent outperformance for Canadian government bonds.
    The domestic data calendar is bare. Third-quarter capacity
utilization data and the October new housing price index are due
for release on Thursday.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)