CANADA FX DEBT-C$ strengthens as economic data weighs on greenback

Mon Mar 28, 2016 10:04am EDT
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* Canadian dollar at C$1.3186, or 75.84 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, March 28 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday as economic
data weighed on the greenback, while Canada's finance minister
was optimistic that deficit spending will spur higher domestic
economic growth.    
    The U.S. dollar hit session lows against a basket of
major currencies after a deep downward revision to U.S. consumer
spending for January.    
    Canada's Liberal government believes the federal budget will
be balanced in "about" five years due to higher growth spurred
by deficit spending, Finance Minister Bill Morneau said on
    The government gave no target date for eliminating the
deficit when it unveiled the budget last week. 
    The stimulus budget, combined with a modest recovery in oil
and non-commodity exports, makes it likely the Bank of Canada's
next move will be an interest rate hike rather than a cut.
    At 9:53 a.m. EDT (1353 GMT), the Canadian dollar 
was trading at C$1.3186 to the greenback, or 75.84 U.S. cents,
stronger than Friday's close of C$1.3240, or 75.53 U.S. cents.
    The currency's weakest level was C$1.3286, while it touched
its strongest since March 23 at C$1.3183.
    Oil prices turned lower in thin Easter holiday trading. U.S.
crude prices were down 0.43 percent to $39.29 a barrel.
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 0.5
Canadian cent to yield 0.568 percent and the benchmark 10-year
 falling 4 Canadian cents to yield 1.276 percent.
    The Canada-U.S. 10-year spread was 0.6 of a basis point less
negative at -61.5 basis points as Canadian government bonds
slightly underperformed.
    January gross domestic product data is awaited on Thursday.
Analysts expect 0.3 percent growth for the month, which would
reinforce expectations that first-quarter growth will exceed the
Bank of Canada's 1 percent forecast. 

 (Reporting by Fergal Smith; Editing by Nick Zieminski)