CANADA FX DEBT-C$ weakens as oil falls, Brexit risk weighs
(Adds analyst quote, updates prices) * Canadian dollar ends at C$1.2839, or 77.89 U.S. cents * Bond prices higher across the maturity curve By Fergal Smith TORONTO, June 22 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday, pulling back from an earlier 12-day high as oil fell and a new poll added to investor caution ahead of a British referendum on the country's membership in the European Union. U.S. crude oil futures settled 72 cents lower at $49.13 a barrel as a smaller-than-expected U.S. inventory drawdown and jitters ahead of the so-called Brexit vote on Thursday weighed. "We would expect that the outcome of that vote could significantly influence foreign exchange markets, at least in the near term," said Eric Viloria, a currency strategist at Wells Fargo, who noted that Canada's commodity-linked currency will be sensitive to shifts in sentiment ahead of the referendum. The campaign for Britain to leave the European Union holds a one-point lead over the "In" camp, according to a survey published by polling firm Opinium. The loonie would weaken and the chances that the Canadian central bank cuts interest rates would jump if Britain votes to leave the European Union, strategists warn, noting the result could hit global growth and spell bad news for commodity-exporting countries. The Canadian dollar ended at C$1.2839 to the greenback, or 77.89 U.S. cents, weaker than Tuesday's close of C$1.2811, or 78.06 U.S. cents. The currency's weakest level of the session was C$1.2853, while it touched its strongest since June 10 at C$1.2743. Domestic retail sales data helped support the Canadian dollar earlier in the session. Retail sales rose by 0.9 percent in April from March to hit a record C$44.28 billion ($34.59 billion), thanks largely to higher sales at gasoline stations. Canadian government bond prices were higher across the maturity curve, with the two-year price up 2 Canadian cents to yield 0.598 percent and the benchmark 10-year rising 19 Canadian cents to yield 1.232 percent. On Tuesday, the 10-year yield touched its highest level in nearly three weeks at 1.255 percent. (Reporting by Fergal Smith; Editing by Lisa Von Ahn and Leslie Adler)
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