March 12, 2018 / 8:26 PM / 6 days ago

CANADA FX DEBT-C$ pulls back from recent rally as oil prices fall

    * Canadian dollar at C$1.2836 or 77.91 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds quote, details, updates prices)
    March 12 (Reuters) - The Canadian dollar weakened modestly
against the greenback on Monday, consolidating gains from last
week's rally and as oil prices slipped on expectations that U.S.
output will rise this year.    
    At 4:05 p.m. EDT (2005 GMT), the Canadian dollar         
was trading 0.2 percent lower at C$1.2836 to the greenback, or
77.91 U.S. cents.
    The loonie pulled back from a more than one-week high hit on
Friday amid improved risk appetite and after U.S. President
Donald Trump said Canada and Mexico would be exempt from tariffs
on steel and aluminum as long as talks to update the North
American Free Trade Agreement progressed.             
    Lower oil prices also helped pressure the Canadian dollar as
U.S. crude        settled down 68 cents at $61.36 a barrel.
    "The main takeaway of markets today is a bit of
consolidation," said Scott Smith, managing partner at Viewpoint
Investment Partners.
    Canadian markets were also looking ahead to Tuesday's speech
on the labor market by Bank of Canada Governor Stephen Poloz,
likely the main domestic economic event of the week.
    The central bank held interest rates steady last week as
expected, while a speech from Deputy Governor Tim Lane on
Thursday stuck to the bank's dovish message that it would be
cautious in considering further increases.             
    While Poloz is unlikely to deviate from that message, Bank
of Canada speeches always carry some risk, Smith said.      
    "The Bank of Canada can be fairly volatile in their speeches
and how they communicate monetary policy, so we can't just
expect that we won't see any changes out of Poloz," Smith said.
    Finance Minister Bill Morneau said during a visit to London
on Monday that there were parallels between the way companies in
North America and Britain are holding back on investment as they
respectively wait for clarity on the renegotiation of NAFTA and
the outcome of talks on a Brexit deal.             
    Canadian government bond prices were higher across the
maturity curve, with the two-year            up 0.5 Canadian
cent to yield 1.829 percent and the benchmark 10-year
            rising 25 Canadian cents to yield 2.239 percent.

 (Reporting by Leah Schnurr in Ottawa; Editing by Steve Orlofsky
and Peter Cooney)
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