CANADA FX DEBT-C$ strengthens to 1-month high as oil rallies

Mon Aug 15, 2016 9:40am EDT
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* 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
    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)