CANADA FX DEBT-Canada $ pulled to four-month low after Iran deal
* C$ at C$1.0555 vs US$, or 94.74 U.S. cents * Loonie falls as Iran deal weighs on oil prices * Bond prices mostly lower across the curve By Leah Schnurr TORONTO, Nov 25 (Reuters) - The Canadian dollar weakened against the greenback on Monday as a deal reached over the weekend to curb Iran's nuclear program drove oil prices lower. The Canadian dollar touched a more than four-month low in the overnight session, extending last week's weakness after a tame inflation report and comments from the head of the Bank of Canada underscored market expectations that interest rates will be kept low for some time. Iran and six world powers struck a deal on Sunday under which Tehran is to limit its nuclear energy program in exchange for initial relief from international trade and financial sanctions. The deal sent oil prices lower with U.S. crude futures down $1.12 to $93.72 a barrel. Canada is a major oil exporter, making its currency sensitive to fluctuations in oil prices. "The assault on the 'loonie' is continuing from last week with the fresh bout of weakness seen this morning sparked by the Iranian nuclear deal reached over the weekend," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. "That's acted as a pretty big weight this morning on energy and the negative spill-over effects of that are having investors shed exposure to the Canadian dollar and other commodity-linked currencies." The Canadian dollar was at C$1.0555 versus the U.S. dollar, or 94.74 U.S. cents, weaker than Friday's close of C$1.0524, or 95.02 U.S. cents. The loonie hit a low of C$1.0584 over night, its lowest since early July. The lows the currency hit in July just above C$1.06 could act as a cap, while the low C$1.05 area is the next likely place for support, said Smith. The domestic economic calendar is light this week and trading could be quieter heading into the U.S. Thanksgiving holiday on Thursday. Focus will be on Friday's Canadian gross domestic product report, with growth in the third quarter forecast to pick up to a 2.5 percent annualized rate. Canadian bond prices were mostly lower across the maturity curve, with the two-year bond off 1 Canadian cent to yield 1.110 percent, while the benchmark 10-year bond was down 10 Canadian cents to yield 2.589 percent.
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