CANADA FX DEBT-C$ strengthens despite drop in oil prices

Tue Mar 29, 2016 9:55am EDT
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* Canadian dollar at C$1.3172, or 75.92 U.S. cents
    * Bond prices higher across the maturity curve

    TORONTO, March 29 (Reuters) - The Canadian dollar
strengthened to a six-day high against its U.S. counterpart on
Tuesday despite a drop in oil prices and soft domestic data,
while attention turned to a speech by Federal Reserve Chair
Janet Yellen.
    The currency extended its recovery from its weakest level
last week at C$1.3296. Still, it is 1.9 percent weaker than on
March 18, which it reached its strongest level in nearly
five-months at C$1.2924.
    Investors will look to Yellen for clues to the interest rate
outlook after weaker-than-expected U.S. consumer spending data
on Monday prompted analysts to suggest the U.S. central bank
would be cautious about raising interest rates this year.
    Oil prices fell, reflecting growing concerns that a
two-month rally might be in danger of fizzling, while analysts
forecast another rise to record levels for U.S. crude
    U.S. crude prices were down 2.69 percent at $38.33 a
    At 9:26 a.m. EDT (1326 GMT), the Canadian dollar 
was trading at C$1.3172 to the greenback, or 75.92 U.S. cents,
slightly stronger than Monday's close of C$1.3181, or 75.87 U.S.
    The currency hit its weakest level of the session at
C$1.3216, while it touched its strongest since March 23 at
    Canadian producer prices took their largest drop in more
than a year in February, pulled down by cheaper energy and
petroleum products as well as lower prices for vehicles, data
from Statistics Canada showed. 
    However, January gross domestic product data due on Thursday
is the major domestic economic report awaited this week.
Analysts expect 0.3 percent growth for the month, which would
reinforce expectations that first-quarter growth will exceed the
Bank of Canada's forecast of 1 percent. 
    Canadian government bond prices were higher across the
maturity curve, in sympathy with U.S. Treasuries.
    The two-year price rose 2.5 Canadian cents to
yield 0.552 percent, and the benchmark 10-year was
up 16 Canadian cents to yield 1.237 percent.
    Earlier, the 10-year yield touched its lowest in nearly
three weeks at 1.221 percent.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)