June 26, 2017 / 1:48 PM / 3 years ago

CANADA FX DEBT-C$ strengthens with oil prices as greenback dips

    * Canadian dollar at C$1.3221, or 75.64 U.S. cents
    * Bond prices mixed across flatter yield curve
    * Gap between 2-year and 10-year yields narrowest in 8

    TORONTO, June 26 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday as oil
prices rose, while softer-than-expected U.S. data weighed on the
    Oil edged up for a third straight session, climbing off last
week's seven-month lows, but gains were capped by a relentless
rise in U.S. supply and bloated global inventories.      
    U.S. crude        prices were up 0.35 percent at $43.16 a
    The U.S. dollar        edged lower against a basket of major
currencies after new orders for key U.S.-made capital goods
unexpectedly fell in May and shipments also declined, suggesting
a loss of momentum in the manufacturing sector halfway through
the second quarter.             
    At 9:29 a.m. ET (1329 GMT), the Canadian dollar          was
trading at C$1.3221 to the greenback, or 75.64 U.S. cents, up
0.4 percent.
    The currency traded in a range of C$1.3215 to C$1.3277.
    Speculators cut bearish bets on the Canadian dollar for a
fourth straight week, data from the U.S. Commodity Futures
Trading Commission and Reuters calculations showed on Friday.
Canadian dollar net short positions fell to 82,881 contracts as
of June 20 from 88,595 a week earlier.             
    Bank of Canada Governor Stephen Poloz will speak in Portugal
on Wednesday.
    Data on Friday showing weaker-than-expected domestic
inflation has reduced the chances of an interest rate hike next
month from the Bank of Canada. But analysts expect policymakers
to stay hawkish amid concern that rates have been low for too
    Canadian government bond prices were mixed across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           was flat to yield 0.898 percent and the 10-year
            rose 15 Canadian cents to yield 1.459 percent.
    The gap between the 2-year and 10-year yields narrowed 1.7
basis points to a spread of 56.1 basis points, its narrowest
since Oct. 6.
    The U.S. Commerce Department is expected to unveil
preliminary anti-dumping duties on Canadian softwood lumber
    Canada's gross domestic product data for April is due on
Friday. Also on Friday, the Bank of Canada will release its
business outlook report.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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