CANADA FX DEBT-C$ dips as oil prices seesaw before Fed meeting this week

Mon Apr 25, 2016 9:37am EDT
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* Canadian dollar at C$1.2690, or 78.80 U.S. cents
    * Bond prices lower across the maturity curve
    * 10-yr yield hits highest since Dec. 9 at 1.554 pct

    TORONTO, April 25 (Reuters) - The Canadian dollar edged
lower against its U.S. counterpart on Monday as oil prices
seesawed and investor attention turned to central bank meetings
in the United States and Japan this week.
    Stronger-than-expected retail sales data on Friday had
helped the loonie rack up last week its fourth week of gains in
a row.
    The currency has rallied 16 percent since falling to a
12-year low in January, helped by a smaller gap between Canadian
and U.S. bond yields and a rebound in oil prices since February.
    However, oil prices seesawed as traders took profits before
the central bank meetings in the United States and Japan. U.S.
crude prices were last down 0.14 percent to $43.67 a
    Federal Reserve policymakers are expected to hold interest
rates steady at Wednesday's announcement, but may tweak their
description of the economic outlook to leave the path open for
future rate rises. 
    At 9:18 a.m. EDT (1318 GMT), the Canadian dollar 
was trading at C$1.2690 to the greenback, or 78.80 U.S. cents,
weaker than Friday's close of C$1.2671, or 78.92 U.S. cents.
    The currency's strongest level of the session was C$1.2653,
while its weakest was C$1.2717. Last week the loonie touched its
strongest since July 6 at C$1.2593.
    Speculators have increased bullish bets on the loonie,
Commodity Futures Trading Commission data showed on Friday. Net
long Canadian dollar positions rose to 7,308 contracts in the
week ended April 19 from 2,385 contracts in the prior week.
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 1.5
Canadian cents to yield 0.686 percent and the benchmark 10-year
 falling 45 Canadian cents to yield 1.543 percent.
    The 10-year yield touched its highest since Dec. 9 at 1.554
percent, while the Canada-U.S. 10-year spread was 4.8 basis
points less negative at -34.5 basis points. That was the
smallest gap since Jan. 20, the day the Bank of Canada surprised
many traders by not cutting its policy rate.
    Bank of Canada Governor Stephen Poloz will gives a speech to
the Investment Industry Association of Canada and Securities
Industry and Financial Markets Association in New York on
Tuesday, while Canada's gross domestic product data for February
is due at the end of the week. 

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)