April 3, 2017 / 8:46 PM / 6 months ago

CANADA FX DEBT-C$ weakens as oil falls, risk appetite recedes

 (Adds analysts comments and details on stocks, Bank of Canada's
business outlook survey and background and updates prices)
    * Canadian dollar ends at C$1.3386, or 74.70 U.S. cents
    * Loonie touches its weakest since March 29 at C$1.3400
    * Bond prices higher across a flatter yield curve

    By Fergal Smith
    TORONTO, April 3 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday, surrendering last week's
gains as oil fell and risk appetite receded.
    U.S. crude oil futures settled 36 cents lower at $50.24 a
barrel, pressured by a rebound in Libyan oil output.
            
    Oil is one of Canada's major exports.
    "Risk coming off today in equity markets" added to pressure
on Canada's currency, said Mazen Issa, senior fx strategist at
TD Securities.     
    Wall Street dipped as investor worries intensified about the
Trump administration's struggles to deliver on its pro-business
policies.             
    Commodity-linked currencies, such as the loonie, tend to
underperform when investors turn less optimistic about the
economic outlook.
    The "price action" of the Canadian dollar against the U.S.
dollar has led to speculation that there have been mergers and
acquisitions-related buying of greenbacks, said Brad Schruder
director of corporate sales and structuring at BMO Capital
Markets.
    Each time the U.S. dollar has dipped there has been an
"interested buyer," Schruder added.
    Last week, ConocoPhillips         agreed to sell oil sands
and western Canadian natural gas assets to Calgary-based Cenovus
Energy Inc          for C$17.7 billion.                
    The Canadian dollar          ended at C$1.3386 to the
greenback, or 74.70 U.S. cents, weaker than Friday's close of
C$1.3299, or 75.19 U.S. cents.
    The currency's strongest level of the session was C$1.3295,
while it touched its weakest since March 29 at C$1.3400.
    The loonie rose 0.6 percent last week as data showing robust
domestic growth in January raised prospects of an
earlier-than-expected Bank of Canada interest rate hike. The
currency finished the first quarter with a 1 percent gain after
rising more than 3 percent in 2016.
    Canadian companies are more optimistic about future sales
and exports, and plan to boost hiring and investment to meet
demand despite lingering uncertainty about U.S. protectionism,
the Bank of Canada said.             
    The central bank's next interest rate decision and Monetary
Policy Report are due on April 12.
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries as investors sought
safety from falling stocks. The two-year            edged up 2
Canadian cents to yield 0.737 percent and the 10-year
            climbed 40 Canadian cents to yield 1.576 percent.
    Canada's trade report for February is due on Tuesday, while
the country's employment report for March is due on Friday.

 (Reporting by Fergal Smith; Editing by Jeffrey Benkoe and
Sandra Maler)
  
 

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