CANADA FX DEBT-C$ extends slide to six-year lows as BoC, data weighs

Fri Jul 17, 2015 4:52pm EDT
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(Updates throughout; adds fresh comment, details, closing trade
    * Canadian dollar at C$1.2987 or 77.00 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, July 17 (Reuters) - The Canadian dollar extended
its losses against the U.S. dollar on Friday following a slew of
economic data that signaled higher U.S. interest rates, while
Canada's benchmark rate just dropped.
    The currency retreated 2.5 percent this week to its weakest
level since March 2009. Its biggest dive came on Wednesday after
the Bank of Canada announced a 25 basis point rate cut for the
second time this year after data showed the economy likely
contracted during the first half of the year.
    "In terms of small moves, the move on Friday is a very
impressive one... Any other time, this would be a perfect
opportunity to square your positions ahead of weekend," said
Adam Button, currency analyst at ForexLive in Montreal.
    "Yet, there is very little of that taking place in Canadian
dollar trading ... Right now you have a perfect storm for the
Canadian dollar. The Bank of Canada isn't a one day, or even a
two-day event."
     The loonie finished at C$1.2987 to the U.S.
dollar, or 77 U.S. cents, weaker than the Bank of Canada's
official close on Thursday of C$1.2970, or 77.10 U.S. cents.
    On the data front, Canada's annual inflation rate edged up
to 1 percent in June, led by higher food prices, but the rate
was tempered by cheap energy prices. 
    In the United States, consumer prices rose for a fifth
straight month, with gasoline prices contributing to the rise,
while housing starts jumped in June and building permits surged
to a near eight-year high. The figures were the latest
indicators supporting expectations of a rate hike this year by
the U.S. Federal Reserve. 
    After the figures were released, the currency dived as low
as C$1.3009, or 76.87 U.S. cents.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 3
Canadian cents to yield 0.428 percent and the benchmark 10-year
 rising 11 Canadian cents to yield 1.567 percent.
    The Canada-U.S. two-year bond spread was -24.2 basis points,
while the 10-year spread was -78 basis points.

 (Reporting by Solarina Ho; Editing by Peter Galloway and
Meredith Mazzilli)