December 7, 2017 / 3:13 PM / in 9 days

CANADA FX DEBT-C$ adds to losses on dovish Bank of Canada

    * Canadian dollar at C$1.2847, or 77.84 U.S. cents
    * Bond prices higher across the yield curve

    TORONTO, Dec 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday, adding to losses from
the day before, when the Bank of Canada held interest rates
steady and tempered expectations for a hike early next year.    
    The central bank struck a more dovish tone than investors
had expected after very strong employment data on Friday.
            
    Still, the Canadian dollar is likely to strengthen over the
coming year, a Reuters poll showed, on assumptions that
uncertainty over trade lifts and a stronger economy boosting
inflation will prompt the Bank of Canada to resume raising
rates.             
    At 9:39 a.m. ET (1439 GMT), the Canadian dollar          was
down 0.5 percent at C$1.2847 to the greenback, or 77.84 U.S.
cents.
    The currency, which touched its weakest since Friday at
C$1.2860, lost ground despite firm domestic data and a higher
price of oil, one of Canada's major exports.
    U.S. crude        prices rose 0.7 percent to $56.37 a
barrel.             
    The value of Canadian building permits increased 3.5 percent
in October from September, more than economists had expected, on
increased plans for commercial and residential construction.
            
    The U.S. dollar        reached a two-week high against a
basket of currencies on optimism that the United States will
push through a tax overhaul.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 1.5 Canadian cents to
yield 1.481 percent and the 10-year             rising 17
Canadian cents to yield 1.837 percent.
    The gap between Canada's two-year yield and its U.S.
equivalent widened by 1.5 basis points to a spread of -33.3
basis points.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
  
 

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