January 27, 2017 / 2:46 PM / 3 years ago

CANADA FX DEBT-C$ edges lower as oil falls; on track for weekly gain

* Canadian dollar at C$1.3111, or 76.27 U.S. cents
    * Loonie on track to gain 1.6 percent for the week
    * Bond prices lower across the yield curve

    TORONTO, Jan 27 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Friday as oil fell and the
greenback extended its recovery against a basket of currencies,
but the loonie remained on track to score its biggest weekly
gain since early December.
    U.S. crude prices were down 1.15 percent at $53.16 a
barrel, giving up gains from earlier in the day, as the market
shifted its focus towards production increases in the United
States from efforts by OPEC and other producers to support
prices by cutting output. 
    Oil is one of Canada's major exports.
    The U.S. dollar pared some gains after data showed
U.S. economic growth slowed sharply in the fourth quarter.
Still, steady consumer spending and rising business investment
suggested the economy would continue to expand. 
    At 9:32 a.m. ET (1432 GMT), the Canadian dollar was
trading at C$1.3111 to the greenback, or 76.27 U.S. cents,
slightly weaker than Thursday's close of C$1.3098, or 76.35 U.S.
    The currency's strongest level of the session was C$1.3085,
while its weakest was C$1.3131.
    The loonie was on course to gain 1.6 percent this week, its
biggest gain since the week ended Dec. 2, using Reuters data, as
investor fears of a more unfavorable trade outlook for Canada
abated and after U.S. President Donald Trump signed orders on
Tuesday smoothing the path for the Keystone XL oil pipeline.
    If built, the pipeline from Alberta to Nebraska would yield
about $2.4 billion (C$3.2 billion) a year for Canada, split
between government revenues, shareholder profits and
re-investment into the still-recovering Canadian oil patch,
according to a Conference Board of Canada research note prepared
for Reuters on Thursday. 
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries after the U.S. economic
    The two-year rose 1.5 Canadian cents to yield
0.808 percent and the 10-year climbed 18 Canadian
cents to yield 1.798 percent.
    On Thursday, the 10-year yield had touched a nearly six-week
high at 1.851 percent. 

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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