CANADA FX DEBT-Canada dollar flat despite higher oil prices

Fri Jun 13, 2014 4:45pm EDT

* Canadian dollar ends at C$1.0856, or 92.11 U.S. cents
    * Rising oil prices fail to boost currency
    * Bond prices mixed

 (Updates prices, adds comments)
    By Cameron French
    TORONTO, June 13 (Reuters) - The Canadian dollar was little
changed against the U.S. dollar on Friday despite a rise in oil
prices as increasing violence in Iraq spurred a flight to
safety.
    Oil prices surged on fears that the escalating violence in
Iraq could disrupt oil exports from the second-largest OPEC
producer, as Iraq's most senior Shi'ite cleric urged his
followers to take up arms against advancing Sunni militants.
 
    Brent crude pushed through $114 a barrel at one
point to a nine-month high and U.S. crude went as high as
$107.68 during the session.
    While higher oil prices are traditionally a positive for the
resource-linked Canadian dollar, the accompanying flight to
safety from the conflict and fears of an impact on global growth
offset that, said Rahim Madhavji, president at
KnightsbridgeFX.com in Toronto.
    "If (higher oil) is driven by any more uncertainty in Iraq,
in the sense of civil war or if there's any military strike ...
that will be negative to the (currency)," he said.
    The Canadian dollar ended the North American
session at C$1.0856, or 92.11 U.S. cents, little changed from
Thursday's close of C$1.0855 or 92.12 U.S. cents.
    "It's been moving pretty quietly in a tight range," said
Madhavji.
    The currency showed no reaction to the election of a
majority Liberal government in Ontario, Canada's most populous
province, on Thursday, and has indeed been moving in a close
range over the past month, oscillating around the C$1.09, or
91.74 U.S. cents, level.
    Madhavji expects that to continue, barring a major increase
in geopolitical risk, until growth or inflation data force the
Bank of Canada to alter its current dovish stance.
    "Everyone's waiting for economic data or inflation data
that's going to push (the currency) to one side or the other,"
he said. 
    Canadian government bond prices were mixed across the
maturity curve. The two-year was down 2.5 Canadian
cents to yield 1.092 percent and the benchmark 10-year bond
 was up 3 Canadian cents to yield 2.313 percent.

 (Reporting by Cameron French; Editing by James Dalgleish)
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