October 2, 2017 / 8:25 PM / 3 years ago

CANADA FX DEBT-C$ retreats against firmer greenback as oil prices slide

 (Adds analyst quotes and details on U.S. data, updates prices)
    * Canadian dollar at C$1.2513, or 79.92 U.S. cents
    * Bond prices lower across a steeper yield curve
    * Oil falls 2.1 percent

    By Fergal Smith
    TORONTO, Oct 2 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday after a drop in the price
of oil, one of Canada's major exports, and a broad rise for the
    Data showing that U.S. factory activity surged to a more
than 13-year high in September helped lift the U.S. dollar
       against a basket of major currencies, while a
violence-marred independence vote in Spain's Catalonia region
weighed on the euro.             
    "It (the Canadian dollar) seems to be following the general
theme of (U.S.) dollar strength for today," said Bipan Rai,
senior macro strategist at CIBC Capital Markets.
    "With the market net long Canadian dollars, it makes sense
that some of those positions are being cleared out in this
    Speculators have raised bullish bets on the loonie to their
highest since November 2012, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
    U.S. crude oil        settled 2.1 percent lower at $50.58 a
barrel as a rise in U.S. drilling and higher output from the
Organization of the Petroleum Exporting Countries put the brakes
on a rally that brought the biggest third-quarter price gain in
13 years.             
    At 4 p.m. (2000 GMT), the Canadian dollar          was
trading at C$1.2513 to the greenback, or 79.92 U.S. cents, down
0.4 percent.
    The currency traded in a range of C$1.2466 to C$1.2524. It
touched a four-week high at C$1.2531 on Friday, when data
showing that Canada's economy stalled in July further dampened
prospects of another interest rate hike by the central bank this
    The Bank of Canada raised rates in July and September after
the country's growth accelerated in the first half of the year,
but speeches by the bank's policymakers have helped talk down
the Canadian dollar in recent weeks after the currency's
strength put growth at risk.             
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year            down 2.5 Canadian
cents to yield 1.533 percent and the 10-year             falling
25 Canadian cents to yield 2.129 percent.
    Last week, the 10-year yield touched a three-year high at
2.202 percent.
    Central bank Deputy Governor Sylvain Leduc will speak on
Tuesday on productivity in the Canadian economy.
    Canada's trade data for August is due on Thursday, and the
September employment report is scheduled for release on Friday.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn and Peter
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