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CANADA FX DEBT-Canadian dollar hits 8-week low as oil falls on virus concerns

    * Canadian dollar dips 0.1% against the greenback
    * Canadian PMI rises to 50.6 in January
    * Price of U.S. oil decreases 1.1%
    * Canadian bond yields rise across steeper yield curve

    TORONTO, Feb 3 (Reuters) - The commodity-linked Canadian
dollar fell to an eight-week low against its broadly stronger
U.S. counterpart on Monday as oil prices fell and domestic data
showed that factory activity increased at a sluggish pace in
January.
    The price of oil, one of Canada's major exports, was dragged
down by concern that the coronavirus outbreak could reduce
demand, though the possibility of deeper output cuts by OPEC and
its allies offered some price support. U.S. crude oil futures
       were down 1.1% at $50.99 a barrel.             
    The U.S. dollar        climbed against a basket of major
currencies, with the greenback gaining more than 1% against the
Chinese renminbi        as Chinese markets took a beating in the
first trading session after an extended Lunar New Year break.
            
    The IHS Markit Canada Manufacturing Purchasing Managers'
index (PMI), a measure of manufacturing business conditions,
rose to a seasonally adjusted 50.6 in January from 50.4 in
December. A reading above 50 shows expansion in the sector.
                
    At 9:42 a.m. (1442 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3246 to the greenback, or 75.49 U.S.
cents. The currency, which fell 1.9% in January, touched its
weakest intraday level since Dec. 9 at 1.3255.
    Speculators have cut their bullish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
and Reuters calculations showed on Friday. As of Jan. 28, net
long positions had fallen to 34,590 contracts from 38,294 in the
prior week.     
    Canada's trade data for December is due on Wednesday and
January jobs data is due at the end of the week, both of which
could help guide expectations for the Bank of Canada's policy
outlook.
    Last month, the Canadian central bank left the door open to
an interest rate cut should a recent slowdown in domestic growth
persist. Money markets see about a 60% chance that it will ease
by April.    
    Canadian government bond yields prices were higher across a
steeper yield curve, with the 10-year             yield rising
2.2 basis points to 1.295%. On Friday, the 10-year yield touched
its lowest intraday level since Oct. 8 at 1.257%.     

 (Reporting by Fergal Smith
Editing by Paul Simao)
  
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