CANADA FX DEBT-C$ sets 7-week low; bounce in oil restrains losses
* Canadian dollar at C$1.3203, or 75.74 U.S. cents * Loonie touches its weakest since July 27 at C$1.3236 * Bond prices lower across a steeper yield curve TORONTO, Sept 15 (Reuters) - The Canadian dollar weakened to set a seven-week low against its U.S. counterpart on Thursday, although losses were restrained as oil rebounded and U.S. economic data came in weaker than expected. Losses for the loonie came after a recent rise in bond yields, which has triggered selling of emerging-market currencies and commodity-linked currencies such as the Canadian dollar. The U.S. dollar seesawed against a basket of major currencies after retail sales and industrial production data disappointed. Oil prices edged up after two consecutive days of losses, with gains capped by returning supplies from Nigeria and Libya. U.S. crude was up 0.67 percent at $43.87 a barrel. At 9:38 a.m. EDT (1338 GMT), the Canadian dollar was trading at C$1.3203 to the greenback, or 75.74 U.S. cents, slightly weaker than Wednesday's close of C$1.3197, or 75.77 U.S. cents. The currency's strongest level of the session was C$1.3157, while it touched its weakest since July 27 at C$1.3236. Canadian household debt as a share of income hit a record high in the second quarter, Statistics Canada data showed in a report likely to reinforce concerns of overborrowing by consumers. Sales of existing Canadian homes fell 3.1 percent in August from July, the fourth straight monthly decline and the largest drop in nearly two years, a report from the Canadian Real Estate Association showed. Still, actual sales, not seasonally adjusted, were up 10.2 percent from August 2015. Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 1 Canadian cent to yield 0.592 percent, and the benchmark 10-year declined 34 Canadian cents to yield 1.224 percent. The curve steepened as the spread between the two-year and 10-year yields widened by 3.1 basis points to 63.2 basis points, indicating underperformance for longer-dated bonds. (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
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