November 29, 2017 / 9:24 PM / in 9 months

CANADA FX DEBT-C$ hits near 4-week low as oil prices drop

 (Adds analyst quotes and details throughout and updates prices)
    * Canadian dollar at C$1.2860, or 77.76 U.S. cents
    * Loonie touches its weakest since Nov. 2 at C$1.2875
    * Bond prices lower across the yield curve
    * Canada-U.S. 10-year spread reaches widest since July 11

    By Fergal Smith
    TORONTO, Nov 29 (Reuters) - The Canadian dollar weakened to
a nearly four-week low against its U.S. counterpart on Wednesday
as oil prices fell, while data showing strong American economic
growth helped the greenback hold onto this week's gains.
    Prices of oil, one of Canada's major exports, were pressured
by conflicting statements from oil ministers a day ahead of
OPEC's meeting in Vienna, as members debate the path for an
extension of the group's supply-cut agreement.             
    U.S. crude oil futures        settled 1.2 percent lower at
$57.30 a barrel.
    The U.S. economy expanded in the third quarter at its
quickest pace in three years. Signs of progress in U.S.
Republicans' efforts to get a tax bill passed added to support
for the U.S. dollar.             
    At 4 p.m. EDT (2100 GMT), the Canadian dollar          was
trading at C$1.2860 to the greenback, or 77.76 U.S. cents, down
0.3 percent.
    The currency's strongest level of the session was C$1.2805,
while it touched its weakest since Nov. 2 at C$1.2875.
    Data will be released Friday on Canada's jobs for November
and gross domestic product for the quarter.
    "I think there is some downside risk to Canadian GDP, and
that might give you your final little flurry in USD-CAD," said
Amo Sahota, director at Klarity FX in San Francisco.
    Sahota expects investors to become interested in buying the
Canadian dollar if the currency weakens to its 200-day moving
average around C$1.2970.
    Investors are also turning attention to an interest rate
decision by the Bank of Canada next week.
    The central bank is breathing a sigh of relief that Canada's
housing boom and the hints of a bust in Toronto are stabilizing,
but the optimism is premature, analysts said.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 2.5 Canadian cents to
yield 1.433 percent and the 10-year             falling 32
Canadian cents to yield 1.880 percent.
    The gap between the 10-year yield and its U.S. counterpart
widened by 0.7 of a basis point to a spread of -50.3 basis
points, its widest since July 11.

 (Reporting by Fergal Smith; Editing by Susan Thomas and
Jonathan Oatis)
  
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