* Canadian dollar weakens 1.6% against the greenback * Canada's economy shrinks by an estimated 9% in March * Price of U.S. oil decreases 2.9% * Canadian bond yields fall across a flatter curve By Fergal Smith TORONTO, April 15 (Reuters) - The Canadian dollar weakened to a one-week low against its U.S. counterpart on Wednesday ahead of an interest rate announcement by the Bank of Canada and as Canada's national statistical agency estimated a deep economic contraction in March. Canada's economy shrank a record 9% in March from the previous month as the coronavirus outbreak forced the shutdown of economic activity during the course of the month, Statistics Canada said in a flash estimate. The Bank of Canada interest rate decision is due at 10 a.m. ET (1400 GMT). Money markets expect the central bank to leave its benchmark interest rate on hold at 0.25% but analysts see a chance that the BoC announces additional measures to support the economy, such as forward guidance on monetary policy or adjustments to its asset-purchase program. "We're not expecting any policy changes from the BoC following an extraordinary month of March," Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets, said in a note. "If the Bank were to ease further, buying provincial bonds seems like the next logical step." Since the start of March, the BoC has slashed interest rates by a total of 150 basis points, in a series of emergency moves, and begun buying at least C$5 billion of government bonds per week. At 8:52 a.m. (1252 GMT), the Canadian dollar was trading 1.6% lower at 1.4105 to the greenback, or 70.90 U.S. cents. The currency touched its weakest intraday level since April 7 at 1.4110. The price of oil, one of Canada's major exports, was pressured by reports of persistent oversupply and collapsing demand due to global coronavirus-related lockdowns and a lack of coordinated oil purchases for strategic storage. U.S. crude oil futures were down 2.9% at $19.52 a barrel. Canadian government bond yields fell across a flatter curve, with the 10-year down 11.1 basis points at 0.647%. (Reporting by Fergal Smith Editing by Nick Zieminski)
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