CANADA FX DEBT-C$ strengthens to 1-week high as oil rallies, Brexit risk dips

Mon Jun 20, 2016 4:41pm EDT
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(Adds analyst quote, updates prices)
    * Canadian dollar ends at C$1.2809, or 78.07 U.S. cents
    * Loonie touches strongest since June 13 at $1.2773
    * Bond prices lower across steeper maturity curve

    By Fergal Smith
    TORONTO, June 20 (Reuters) - The Canadian dollar
strengthened to a one-week high against its U.S. counterpart on
Monday as improved risk appetite ahead of a British referendum
on Thursday offset domestic economic data that indicated the
second quarter began on weak footing.
    Global stocks rose and oil rallied after opinion polls swung
in favor of Britain staying in the European Union, triggering
support for Canada's risk-sensitive commodity-linked currency.
    "All eyes are going to be on the UK on Thursday and Friday,"
said Darren Richardson, senior corporate dealer, CanadianForex.
    The loonie may strengthen somewhat more if the "Remain" camp
wins and risk appetite rises, but it will require oil to trade
decisively above $50 a barrel for the currency to manage sharper
gains, Richardson added.    
    U.S. crude prices settled up $1.39 at $49.37 a
    The Canadian dollar closed at C$1.2809 to the
greenback, or 78.07 U.S. cents, stronger than Friday's close of
C$1.2878, or 77.65 U.S. cents.
    The currency's weakest level of the session was C$1.2878,
while it touched its strongest since June 13 at $1.2773.
    The value of Canadian wholesale trade rose 0.1 percent in
April, far less than expected. Volumes rose by 0.2 percent.
    Canadian government bond prices were lower across a steeper
maturity curve in sympathy with Treasuries as investor appetite
for safe-haven assets waned.
    The two-year price fell 11 Canadian cents to
yield 0.578 percent and the benchmark 10-year 
dropped 82 Canadian cents to yield 1.206 percent.
    The 10-year yield touched its highest since June 8 at 1.212
percent. Last week it hit a four-month low at 1.052 percent.
    Domestic retail sales data is due on Wednesday. Retail sales
are expected to have climbed by 0.9 percent in April after
falling in March.      

 (Reporting by Fergal Smith; Editing by Nick Zieminski and
Meredith Mazzilli)