November 10, 2016 / 3:02 PM / 9 months ago

CANADA FX DEBT-C$ weakens as oil falls, investors weigh Trump impact

* Canadian dollar at C$1.3491, or 74.12 U.S. cents
    * Bond prices lower across steeper yield curve
    * 10-year yield hits highest since May 4 at 1.461 percent

    TORONTO, Nov 10 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday, pressured by lower oil
prices and broader gains for the greenback as investors weighed
how the policies of U.S. president-elect Donald Trump could
affect economic growth.
    Trump has promised to cut taxes and spend on infrastructure,
but analysts said fears about the impact of some of his campaign
promises on Canadian trade have raised the risk of an interest
rate cut by the Bank of Canada. 
    The central bank cut rates twice last year as a plunge in
oil prices hit the economy. The bank has kept rates at 0.50
percent since July 2015, but acknowledged after its policy
meeting last month that it had considered cutting again.
    Canada relies heavily on selling goods and services into the
much larger U.S. market. Trump has pledged to renegotiate the
North American Free Trade Agreement.
    U.S. crude prices were down 1.33 percent at $44.67 a
barrel as markets focused on global oversupply and a key OPEC
meeting this month at which members could decide to cut
production. Oil is one of Canada's major exports.
    At 9:37 a.m. EDT (1437 GMT), the Canadian dollar 
was trading at C$1.3491 to the greenback, or 74.12 U.S. cents,
weaker than Wednesday's close of C$1.3378, or 74.75 U.S. cents.
    The currency's strongest level of the session was C$1.3386,
while its weakest was C$1.3498.
    On Wednesday, the loonie touched an eight-month low at
C$1.3525.
    In domestic data, new home prices rose 0.2 percent in
September from the previous month, Statistics Canada said.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries as investors bet
that Trump will enact policies that will increase inflation.
    The two-year price fell 8.5 Canadian cents to
yield 0.634 percent and the benchmark 10-year 
declined 81 Canadian cents to yield 1.461 percent, its highest
since May 4.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)

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