February 21, 2018 / 2:45 PM / 8 months ago

CANADA FX DEBT-C$ hits 12-day low vs firmer greenback as oil falls

    * Canadian dollar at C$1.2667, or 78.95 U.S. cents
    * Oil prices fall 0.9 percent
    * Bond prices higher across the yield curve
    * Canada-U.S. 2-year spread hits widest since June 14

    TORONTO, Feb 21 (Reuters) - The Canadian dollar weakened to
a nearly two-week low against its U.S. counterpart on Wednesday
as oil prices fell and the greenback made broader gains.
    The price of oil, one of Canada's major exports, was weighed
down by an expected rise in U.S. crude production and by a
rebound in the U.S. dollar        from three-year lows hit last
week.             
    U.S. crude        prices were down 0.9 percent at $61.23 a
barrel.
    The recent climb in U.S. Treasury yields helped the
greenback gain ground against a basket of major currencies ahead
of minutes of the Federal Reserve's most recent policy meeting.
            
    At 9:21 a.m. EST (1421 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.2667 to the greenback, or
78.95 U.S. cents.
    The currency's strongest level of the session was C$1.2643,
while it touched its weakest since Feb. 9 at C$1.2683.    
    Losses for the loonie came after recent data showed a drop
in December manufacturing shipments and wholesale trade, which
could dent prospects for monthly gross domestic product.
    Canada's retail sales report for December is due on Thursday
and the country's January inflation report is set for Friday.   
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
price rose 2.5 Canadian cents to yield 1.814 percent and the
10-year             climbed 15 Canadian cents to yield 2.305
percent.
    The gap between Canada's 2-year yield and its U.S.
equivalent widened by 0.9 of a basis point to a spread of -44.4
basis points, its widest since June 14.
    Ontario's Liberals, the ruling party in Canada's most
populous province, introduced legislation on Tuesday that would
give officials authority to retaliate against U.S. states that
institute "Buy American" procurement policies.             
    Also on Tuesday, British Columbia moved to crack down on
real estate speculators, expanding its foreign buyer tax and
introducing a new speculation tax, as part of a wide-ranging
strategy to cool housing prices in Canada's most expensive real
estate market.             

 (Reporting by Fergal Smith; Editing by David Gregorio)
  
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