May 17, 2016 / 2:02 PM / 4 years ago

CANADA FX DEBT-C$ weakens as wildfire disrupts energy producers

* Canadian dollar at C$1.2941, or 77.27 U.S. cents
    * Bond prices higher across the maturity curve

    TORONTO, May 17 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as a wildfire threatened
some oil sand facilities in Alberta, although losses were
tempered by higher crude prices and domestic manufacturing data
that was less weak than feared.
    Canadian energy producers were hit with fresh disruptions
after a massive wildfire around the oil sands hub of Fort
McMurray, Alberta, shifted north, forcing the evacuation of
about 4,000 people from work camps. 
    Canadian factory sales fell 0.9 percent in March from
February on weakness in transportation equipment and primary
metals, data from Statistics Canada showed. The decline was
smaller than forecast, however, and sales rose 0.1 percent in
constant-dollar terms. 
    At 9:23 a.m. EDT (1323 GMT), the Canadian dollar 
was trading at C$1.2941 to the greenback, or 77.27 U.S. cents,
weaker than Monday's close of C$1.2896, or 77.54 U.S. cents.
    The currency's strongest level of the session was C$1.2837,
while its weakest was C$1.2954.
    The Canadian dollar has weakened from a 10-month high of
C$1.2461 earlier this month, pressured by a bleaker outlook for
the economy after a strong start to 2016. Last week it touched
C$1.3016, its weakest in one month.                
    Oil rose to a seven-month high, supported by outages in
Nigeria and Canada. U.S. crude prices were up 0.67
percent at $48.04 a barrel.    
    U.S. consumer prices recorded their biggest increase in more
than three years in April, pointing to a steady inflation
build-up that could give the Federal Reserve ammunition to raise
interest rates later this year. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 0.5 Canadian
cent to yield 0.562 percent and the benchmark 10-year
 rising 21 Canadian cents to yield 1.292 percent.
    The Canada-U.S. two-year bond spread was 2.3 basis points
more negative at -24.5 basis points, its largest gap since March
29, while the 10-year spread was 1.5 basis points more negative
at -45.4 basis points as Canadian government bonds outperformed.
    This week, investors are awaiting Canadian wholesale trade
and retail sales data for March and inflation data for April.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
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