CANADA FX DEBT-C$ weakens to 2-week low as oil falls

Mon Aug 29, 2016 9:35am EDT
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* Canadian dollar at C$1.3023, or 76.79 U.S. cents
    * Bond prices higher across flatter maturity curve

    TORONTO, Aug 29 (Reuters) - The Canadian dollar weakened to
a two-week low against its U.S. counterpart on Monday as oil
fell, and the greenback drew support from heightened
expectations of a U.S. interest rate hike as soon as September.
    The odds of a Federal Reserve rate increase in September
have climbed to 30 percent, up from 18 percent before senior Fed
officials spoke on Friday, according to CME Group's FedWatch
    Speaking in Jackson Hole, Wyoming, on Friday, Fed Chair
Janet Yellen said the case for raising U.S. interest rates has
strengthened in recent months. Fed Vice Chair Stanley Fischer
later reinforced that message.  
    Oil prices fell, pressured by high output from Middle East
OPEC members and as a stronger U.S. dollar weighed on
commodities. U.S. crude oil futures were down 74 cents at
$47.64 a barrel.
    Oil is one of Canada's major exports.
    At 9:12 a.m. EDT (1312 GMT), the Canadian dollar 
was trading at C$1.3023 to the greenback, or 76.79 U.S. cents,
weaker than Friday's close of C$1.3000, or 76.92 U.S. cents.
    The currency's strongest level of the session was C$1.2971,
while it touched its weakest since Aug. 11 at C$1.3029.
    Speculators raised bullish bets on the Canadian dollar for
the first week in four, Commodity Futures Trading Commission
data showed on Friday. Net long Canadian dollar positions rose
to 16,734 contracts in the week ended Aug. 23 from 12,473
contracts in the prior week.
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
 bond rose 2 Canadian cents to yield 0.597 percent and
the benchmark 10-year climbed 22 Canadian cents to
yield 1.069 percent.
    Canada's gross domestic product data for the second quarter
is due for release on Wednesday. The economy is forecast to have
contracted at a 1.5 percent annualized pace as growth was shaken
by wildfires in northern Alberta that disrupted oil production.
    GDP figures for June, which will also be released on
Wednesday, are expected to show growth picked up by 0.4 percent
in the month, which should bolster expectations the economy will
rebound in the third quarter.

 (Reporting by Fergal Smith Editing by W Simon)