CANADA FX DEBT-C$ weakens even as U.S. crude stabilizes

Mon Dec 21, 2015 4:57pm EST
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* Canadian dollar at C$1.3965 or 71.61 U.S. cents
    * Bond prices higher across the curve

 (Adds details, quotes, updates prices)
    TORONTO/OTTAWA, Dec 21 (Reuters) - The Canadian dollar
weakened slightly against the greenback on Monday with a lack of
liquidity and last week's significant decline leading to a tight
trading range.
    The Canadian dollar has lost about 20 percent for 2015 so
far, putting it on track for its worst year since the global
financial crisis in 2008. The loonie has been pummeled by the
slide in oil, two interest rate cuts by the Bank of Canada and
favor for its U.S. counterpart as the Federal Reserve started
raising rates.
    The currency touched a more than 11-year low of C$1.4003 on
Friday before backing off the psychologically important level.
    "That's the big line in the sand right now, that C$1.40
level," said Scott Smith, senior market analyst at Cambridge
Global Payments.
    "Unless we see oil take a nose dive heading into the
holidays, I think C$1.40 or just around there will be well
defended and it will likely be the beginning of January before
we get some more decisive price action to whether or not U.S.
dollar-Canadian dollar moves materially higher."
    The Canadian dollar ended the North American
session at C$1.3965 to the greenback, or 71.61 U.S. cents,
weaker than Friday's close of C$1.3945, or 71.71 U.S. cents.
    Brent crude prices hit their lowest in more than 11 years on
Monday, hounded by a relentless rise in global supply that looks
set to outpace demand again next year. 
    U.S. crude prices settled up 1 cent at $34.74 a
barrel while Brent crude lost 53 cents to $36.35. 
    The domestic economic calendar is light this week except for
Wednesday's release of economic growth and retail sales for
    Other figures have suggested the final quarter of 2015 had a
weak start after the economy emerged from recession in the third
quarter. Economists expect the growth of 0.2 percent in October.
    "The Canadian dollar is susceptible to negative news," said
    "If GDP continues to underwhelm because of the tertiary
effects of the oil and gas slowdown in western Canada, that will
continue to weigh on the loonie."
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 2 Canadian
cents to yield 0.491 percent and the benchmark 10-year
 rising 15 Canadian cents to yield 1.383 percent.
    The Canada-U.S. two-year bond spread was -46.1 basis points
while the 10-year spread was -81.4 basis points.

 (Reporting by Alastair Sharp and Leah Schnurr; editing by Grant