CANADA FX DEBT-C$ sharply weaker after oil price fall

* Canadian dollar at C$1.2543, or 79.72 U.S. cents
    * Bond prices mixed along the maturity curve

    By Alastair Sharp
    TORONTO, Feb 19 (Reuters) - The Canadian dollar lost more
than a cent of value versus its U.S. counterpart on Thursday, as
it headed for a second straight day of declines on renewed
weakness in crude oil prices.
    U.S. crude inventories rose much more than expected, data
showed, again raising market fears about oversupply. 
    Canada is a major oil producer, and weakness in the price of
the commodity has weighed on the currency for months.  
    The Canadian dollar was at C$1.2543 to the
greenback, or 79.72 U.S. cents, much weaker than Wednesday's
close of C$1.2418, or 80.53 U.S. cents.
    "Even within the commodity group Canada is experiencing a
little independent weakness. You can put that on the movement
we've seen in oil prices," said Mark Chandler, head of Canadian
fixed income and currency strategy at Royal Bank of Canada.
    He said the loonie, as Canada's currency is colloquially
known, will likely face more obstacles in coming weeks and
months as slumping oil prices feed into softer economic data.
    "Unequivocally, over the next three months or so you're
going to see a patch of soft data coming out in Canada related
to the oil-price decline. It's hard to bet against the trend of
a weaker Canadian dollar going forward."
    Traders will pay attention to a speech on inflation
expectations from Bank of Canada Deputy Governor Agathe Côté
later in the session, with another rate cut priced into market
expectations after January's surprise reduction. 
    "The market's wary whenever you have a Bank of Canada
official speaking now because they've been so dovish and that
may be another factor behind currency weakness here," Chandler
    Canadian government bond prices were mixed along the
maturity curve, with the two-year down 1 Canadian
cents to yield 0.427 percent and the benchmark 10-year
 up 12 Canadian cents to yield 1.461 percent.

 (Reporting by Alastair Sharp; Editing by Bernadette Baum)