CANADA FX DEBT-C$ weakens to 5-week low as oil and stocks fall
* Canadian dollar ends at 1.3170, or 75.93 U.S. cents * Loonie touches its weakest since Aug. 9 at C$1.3190 * Canadian bond prices lower across steeper maturity curve * 10-year yield touches its highest in more than two months By Fergal Smith TORONTO, Sept 13 (Reuters) - The Canadian dollar fell on Tuesday, touching its weakest level in five weeks against its U.S. counterpart as a drop in stock and commodity markets weighed on the risk-sensitive commodity-linked currency. World stock markets and energy prices fell after energy producers and consumers predicted an oil glut was likely to persist well into next year. U.S. crude prices settled $1.39 lower at $44.90 a barrel. A capitulation of investor bets that reach for yield added to pressure on higher yielding commodity currencies, such as the Canadian dollar, said Mazen Issa, senior fx strategist at TD Securities. The commodity-linked Canadian dollar ended at C$1.3170 to the greenback, or 75.93 U.S. cents, much weaker than the Bank of Canada's official close on Monday of C$1.3049, or 76.63 U.S. cents. The currency's strongest level of the session was C$1.3030, while it touched its weakest since Aug. 9 at C$1.3190. The Canadian dollar underperformed many major currencies, although it gained against fellow commodity currencies, the Australian and New Zealand dollars, as well as some emerging market currencies, such as the Brazilian real and the Mexican peso. Canada can lead the process of global economic recovery by setting standards for other countries to aspire to, the International Monetary Fund's Managing Director Christine Lagarde said. Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year price fell 2.5 Canadian cents to yield 0.599 percent and the benchmark 10-year declined 68 Canadian cents to yield 1.229 percent. The 10-year yield touched its highest since June 23 at 1.250 percent. The U.S. dollar was broadly higher, recovering ground lost in the previous session following a speech by Federal Reserve policymaker Lael Brainard that solidified the view that U.S. interest rates are unlikely to rise this month. Bank of Canada Senior Deputy Governor Carolyn Wilkins will speak on Wednesday. After the Bank of Canada struck a dovish tone in its most recent policy statement, investors will look for insight into how the central bank now sees the Canadian economy faring in the second half of the year. (Reporting by Alastair Sharp; Editing by Nick Zieminski and David Gregorio)
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