March 6, 2017 / 9:45 PM / in 3 years

CANADA FX DEBT-C$ weaker ahead of key data

 (Adds broker comment, updates prices to close)
    * Canadian dollar settled at C$1.3410, or 74.57 U.S. cents
    * Bond prices mixed across the maturity curve

    By Alastair Sharp
    TORONTO, March 6 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday after falling more than 2
percent last week, but traded in a narrow range ahead of
upcoming domestic trade and employment data.
    Last week's losses for the loonie came as U.S. Federal
Reserve Chair Janet Yellen cemented the view that the Fed will
raise interest rates at its March 14-15 meeting. 
    In contrast, the Bank of Canada held rates steady on
Wednesday as it stayed focused on the "significant
uncertainties" facing the economy, including the policies of
U.S. President Donald Trump.    
    "We grind forward to the employment data for North America
at the end of the week," said Darcy Browne, managing director
for foreign exchange sales at CIBC Capital Markets.
    He said a solid U.S. jobs report for February on Friday
would be unlikely to weigh heavily on the Canadian currency
given a March hike by the Fed is almost completely priced in at
this point, while a February pullback in Canadian job growth
after several large gains also would not be a surprise.
    "I don't see the loonie getting completely stomped on," he
said. "The Canadian data isn't that bad." 
    Policy divergence will pressure the loonie over the coming
months, a Reuters poll predicted.             
    The Canadian dollar          settled at C$1.3410 to the
greenback, or 74.57 U.S. cents, slightly weaker than Friday's
close of C$1.3379, or 74.74 U.S. cents.
    The currency's strongest level of the session was C$1.3373,
while its weakest was C$1.3425. On Friday, the loonie touched a
nearly two-month low at C$1.3437.
    Investors will be watching to see whether Canada can post
its third monthly trade surplus in a row in January, when the
data is released on Tuesday. The focus will also be on exports,
where volumes were disappointing in January.         
    Canadian government bond prices were mixed and little
changed across the yield curve, with the two-year           
flat to yield 0.765 percent and the 10-year             down 6
Canadian cents to yield 1.707 percent.

 (Additional reporting by Fergal Smith; Editing by Nick
Zieminski and Jonathan Oatis)
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