CANADA FX DEBT-C$ strengthens to 1-month high as oil rallies
* Canadian dollar at C$1.2931, or 77.33 U.S. cents * Loonie touches its strongest since July 15 at C$1.2914 * Bond prices lower across the maturity curve TORONTO, Aug 15 (Reuters) - The commodity-linked Canadian dollar strengthened to a one-month high against its U.S. counterpart on Monday as oil prices rose and as sluggish U.S. data tempered expectations of a Federal Reserve interest rate hike this year. Oil prices rose to their highest in nearly a month as speculation intensified about potential producer action to support prices in an oversupplied market. U.S. crude prices were up 1.46 percent at $45.14 a barrel. U.S. data on Friday that showed retail sales were unexpectedly flat in July tempered expectations of a Fed interest rate hike this year. At 9:27 a.m. EDT (1327 GMT), the Canadian dollar was trading at C$1.2931 to the greenback, or 77.33 U.S. cents, stronger than Friday's close of C$1.2962, or 77.15 U.S. cents. The currency's weakest level of the session was C$1.2975, while it touched its strongest since July 15 at C$1.2914. Speculators reduced bullish bets on the loonie for a second straight week, Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions fell to 15,366 contracts in the week ended Aug. 9 from 17,758 contracts in the prior week. Canadian government bond prices were lower across the maturity curve in sympathy with U.S. Treasuries. The two-year bond dipped 3.5 Canadian cents to yield 0.544 percent and the benchmark 10-year declined 26 Canadian cents to yield 1.033 percent. The curve steepened as the spread between the 2-year and 10-year yields widened by 1 basis point to 48.9 basis points, indicating underperformance for longer-dated maturities. On Friday, it hit its narrowest gap since June 2008 at 47.9 basis points. Sales of existing Canadian homes fell 1.3 percent in July from June, making for the third monthly decrease in a row, a report from the Canadian Real Estate Association showed. Domestic data, including retail sales for June and inflation for July, will both be released on Friday. (Reporting by Fergal Smith; Editing by Bernadette Baum)
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