November 14, 2016 / 2:47 PM / in a year

CANADA FX DEBT-C$ hits new 8-month low vs greenback, yields surge

* Canadian dollar at C$1.3549, or 73.81 U.S. cents
    * Loonie touches its weakest since Feb. 25 at C$1.3589
    * Bond prices lower across the yield curve
    * 10-year yield touches an 11-month high at 1.591 percent

    TORONTO, Nov 14 (Reuters) - The Canadian dollar weakened to
a fresh eight-month against its firmer U.S. counterpart on
Monday, and Canada's bond yields surged as investors bet that
U.S. President-elect Donald Trump will pursue policies that
trigger higher inflation.
    The 10-year yield touched its highest in 11 months at 1.591
percent. Just one and a half months ago it hit a record low at
0.904 percent.
    The U.S. dollar posted an 11-month peak against a
basket of major currencies as the risk of faster inflation and
wider budget deficits, if Trump should go on a U.S. spending
spree, sent U.S. Treasury and other benchmark global bond yields
shooting higher. 
    Lower oil prices added to pressure on the Canadian dollar.
U.S. crude prices were down 1.11 percent to $42.93 a
barrel as the prospect of another year of oversupply and weak
prices overshadowed chances that OPEC will reach a deal to cut
output. 
    Oil is one of Canada`s major exports.
    At 9:22 a.m. EDT (1422 GMT), the Canadian dollar 
was trading at C$1.3549 to the greenback, or 73.81 U.S. cents,
slightly weaker than Friday's close of C$1.3545, or 73.83 U.S.
cents, according to Reuters data.
    The currency's strongest level of the session was C$1.3495,
while it touched its weakest since Feb. 25 at C$1.3589.
    Its official close on Thursday, ahead of Friday's
Remembrance Day holiday, was C$1.3483, or 74.17 U.S. cents.
    Canadian Prime Minister Justin Trudeau will address a
Toronto summit organized by asset manager BlackRock. The
meetings are part of the Liberal government's efforts to
leverage private sector funds as it spends billions on
infrastructure in a bid to revive sluggish economic growth.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year 
fell 6.5 Canadian cents to yield 0.662 percent and the benchmark
10-year declined 107 Canadian cents to yield 1.553
percent.
    The curve steepened as the spread between the 2-year and
10-year yields widened by 8.7 basis points to 89.1 basis points,
its largest gap since January, indicating underperformance for
longer-dated bonds.

 (Reporting by Fergal Smith Editing by W Simon)

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