CANADA FX DEBT-C$ weakens to a nearly one-week low as oil prices fall
* Canadian dollar at C$1.3346, or 74.93 U.S. cents * Bond prices higher across a flatter maturity curve TORONTO, March 15 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday, hitting a nearly one-week low as crude oil prices fell and investors braced for a policy decision from the U.S. Federal Reserve on Wednesday. Oil prices slid for a second day as concerns emerged that a six-week rally may have fizzled after OPEC doused hopes for a speedy erosion of a global overhang of unwanted crude. U.S. crude prices were down 1.34 percent to $36.68 a barrel. Adding to headwinds for the risk-sensitive commodity related currency, European shares tracked Asian shares lower after the Bank of Japan painted a bleaker picture of the Japanese economy, while U.S. stocks weakened as investors' focus turned to the two-day Fed policy meeting beginning on Tuesday. At 9:20 a.m. EST (1320 GMT), the Canadian dollar was trading at C$1.3346 to the greenback, or 74.93 U.S. cents, weaker than Monday's close of C$1.3267, or 75.37 U.S. cents. The currency's strongest level of the session was C$1.3259, while it touched its weakest since March 9 at C$1.3400. Last week the loonie, as Canada's currency is colloquially known, posted a four-month high at C$1.3168. Domestic data was mixed. Sales of existing homes rose 0.8 percent in February from the prior month, a report from the Canadian Real Estate Association showed. Data from PayNet showed that commercial borrowing by small businesses dipped at the start of 2016 as the economy continued to feel the pain from the downturn in energy prices. Canadian government bond prices rose across the maturity curve, with the two-year price up 2 Canadian cents to yield 0.568 percent and the benchmark 10-year rising 32 Canadian cents to yield 1.311 percent. The curve flattened as the spread between the 2-year and 10-year yields narrowed by 2.3 basis points to 74.3 basis points, indicating outperformance for longer-dated maturities. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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