CANADA FX DEBT-C$ weakest close in almost six weeks after Fed minutes
(Adds strategist comment, Fed minutes impact; updates prices) * Canadian dollar ends at C$1.3023, or 76.79 U.S. cents * Bond prices lower across the maturity curve By Alastair Sharp TORONTO, May 18 (Reuters) - The Canadian dollar weakened sharply on Wednesday as the Federal Reserve signaled U.S. interest rates could rise sooner than investors were anticipating, boosting the greenback. The loonie settled weaker than C$1.30 for the first time since early April, as oil prices also retreated in the face of the Fed saying a rate hike was possible at its June meeting. Tactically, "the Fed is trying to introduce two-way risk around the Fed meeting," said Mazen Issa, a senior foreign exchange strategist at TD Securities. The Canadian dollar settled at C$1.3023 to the greenback, or 76.79 U.S. cents, much weaker than Tuesday's close of C$1.2903, or 77.50 U.S. cents. It last closed weaker than that on April 7. The currency's strongest level of the session was C$1.2894, while its weakest was C$1.3037. It has outperformed some other major currencies against the greenback given a sustained recovery in oil prices since February, although last week it touched C$1.3016, its weakest in one month. But closing above C$1.3020 on Wednesday makes further dollar/Canada upside more likely, Issa said, with little resistance noted until C$1.32. Hot and dry weather and strong winds were expected to push a massive wildfire near Fort McMurray, Alberta eastward on Wednesday, threatening facilities and work camps in the oil sands region. Economists had already been expecting a sharp slowdown in Canada's economy after a strong start to 2016. Lengthening the timeline for oil production to return to normal levels could add downside risk to the outlook, according to a research note on Wednesday from BMO Capital Markets, which projects flat growth in the second quarter. Foreign investment in Canadian securities climbed for a third straight month as foreigners bought a net C$17.17 billion ($13.25 billion) worth of securities in March, mainly in bonds, Statistics Canada said. Canadian government bond prices were lower across the maturity curve, with the two-year price falling 9.5 Canadian cents to yield 0.635 percent, and the benchmark 10-year down 44 Canadian cents to yield 1.365 percent. Investors are awaiting Canadian wholesale trade data for March, set for release on Thursday, while Canada's March retail sales data and April inflation data are due on Friday. (Additional reporting by Fergal Smith; Editing by W Simon and James Dalgleish)
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