CANADA FX DEBT-C$ weakens as oil retreats; attention turns to BOC rate announcement

Wed Apr 13, 2016 9:32am EDT
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* Canadian dollar at C$1.2803, or 78.11 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, April 13 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday as oil prices
retreated, while domestic attention turned to the Bank of
Canada's interest rate announcement later in the morning.
    Recent gains for the currency were pared after making a near
nine-month high at C$1.2750 on Tuesday.
    The loonie has rebounded 15 percent from a 12-year low in
January, supported by a partial recovery in oil prices, the
Canadian government's plan for fiscal stimulus, a run of
better-than-expected economic data at the start of the year and
sharply reduced expectations for Bank of Canada rate cuts.
    The implied probability of a Bank of Canada interest rate
cut this year has dropped to less than 10 percent from more than
50 percent at the start of March. 
    The interest rate announcement at 10:00 a.m. EDT (1400 GMT)
is widely expected to result in the Bank of Canada's policy rate
being held at 0.5 percent.   
    The central bank is expected to raise its growth forecasts,
which will also incorporate the anticipated impact from the new
Liberal government's recently announced stimulus measures. But
market players predict Governor Stephen Poloz will use a press
conference at 11:15 a.m. EDT (1515 GMT) to talk up economic
risks and play down signs of stronger growth in order to help
keep a recovering currency from choking off exports.
    U.S. crude prices were down 1 percent to $41.75 a
barrel on concerns that a producer meeting set for Sunday will
do little to trim oversupply. 
    At 9:12 a.m. EDT (1312 GMT), the Canadian dollar 
was trading at C$1.2803 to the greenback, or 78.11 U.S. cents,
weaker than Tuesday's close of C$1.2759, or 78.38 U.S. cents.
    The currency's weakest level was C$1.2818, while its
strongest was C$1.2750, matching the near 9-month high reached
on Tuesday.
    Global stocks rose on after surprisingly upbeat Chinese
trade data offered hope Asia's biggest economy is finally
stabilizing, boosting risk appetite. 
    However, U.S. retail sales unexpectedly fell in March as
households cut back on purchases of automobiles, further
evidence that economic growth stumbled in the first quarter.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 0.5
Canadian cent to yield 0.585 percent and the benchmark 10-year
 rising 6 Canadian cents to yield 1.286 percent.
    The 10-year yield touched its highest since March 28 at
1.305 percent.

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama)