July 31, 2017 / 1:50 PM / 3 years ago

CANADA FX DEBT-C$ weakens but on track to advance for 3rd straight month

    * Canadian dollar at C$1.2472, or 80.18 U.S. cents
    * Bond prices mixed across a steeper yield curve
    * 10-year yield touches its highest since November 2014

    TORONTO, July 31 (Reuters) - The Canadian dollar weakened on
Monday against its U.S. counterpart as oil prices dipped and the
greenback posted broader gains, but the loonie was on track to
advance for the third straight month.
    The currency has rallied more than 10 percent since early
May, including 4 percent this month, as the Bank of Canada
raised interest rates for the first time in nearly seven years.
    Data on Friday showing robust growth in the domestic economy
in May has supported expectations that the central bank will
hike again in the coming months.           
    U.S. crude        prices were down 0.38 percent at $49.52 a
barrel. Prices had hit an earlier 2-month high, boosted by news
of a producers' technical meeting next week.             
    The U.S. dollar        edged higher against a basket of
major currencies after euro zone inflation data helped cool
expectations of a rapid withdrawal of policy stimulus by the
European Central Bank in the coming months.
    At 9:32 a.m. ET (1332 GMT), the Canadian dollar          was
trading at C$1.2472 to the greenback, or 80.18 U.S. cents, down
0.3 percent.
    The currency traded in a range of C$1.2433 to C$1.2490. On
Thursday, it touched its strongest in more than two years at
    Speculators have increased bullish bets on the loonie, data
from the U.S. Commodity Futures Trading Commission and Reuters
calculations showed on Friday. Canadian dollar net long
positions rose to 26,613 contracts as of July 25 from 8,043
contracts a week earlier.             
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            price up 0.5 Canadian
cent to yield 1.325 percent and the 10-year             falling
23 Canadian cents to yield 2.056 percent.
    The 10-year yield touched its highest since November 2014 at
2.065 percent.
    Canadian producer prices fell more than expected in June as
energy and petroleum products saw their largest decline since
February of last year, data from Statistics Canada showed.
    Domestic jobs data for July and trade data for June are due
on Friday.         

 (Reporting by Fergal Smith; Editing by Nick Zieminski)
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