December 19, 2016 / 2:47 PM / in a year

CANADA FX DEBT-C$ weakens against firm greenback as oil dips

* Canadian dollar at C$1.3382, or 74.73 U.S. cents
    * Bond prices higher across the yield curve

    TORONTO, Dec 19 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as oil dipped and
expectations for further U.S. Federal Reserve interest rate
hikes kept the greenback close to its highest in 14 years.    
    The loonie fell 1.2 percent last week after the Fed raised
interest rates and signaled increases would follow at a faster
pace next year.
    The price of oil, one of Canada's major exports, edged down
due to renewed gains for the U.S. dollar, but losses were
tempered by delays in new Libyan oil exports and expectations of
tighter supplies going into 2017. 
    The U.S. dollar was underpinned by expectations that
a fiscal expansion planned by U.S. President-elect Donald Trump
will boost inflation and lead to a faster pace of interest rates
hikes. 
    At 9:25 a.m. EST (1425 GMT), the Canadian dollar 
traded at C$1.3382 to the greenback, or 74.73 U.S. cents, weaker
than Friday's close of C$1.3344, or 74.94 U.S.
    The currency's strongest level of the session was C$1.3319,
while its weakest was C$1.3395.
    On Thursday, the loonie hit its weakest in two weeks at
C$1.3417.
    Bank of Canada Governor Stephen Poloz said rising global
protectionism could drive up the cost of goods and cause job
losses, but dismissed the conclusion that Canadian exports will
suffer under a Trump administration. 
    Speculators raised bearish bets on the Canadian dollar to
the most since March, according to Reuters calculations and data
from the Commodity Futures Trading Commission released on
Friday. Net short Canadian dollar positions rose to 21,869
contracts as of Dec. 13 from 18,158 a week earlier.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year 
rose 3 Canadian cents to yield 0.806 percent and the benchmark
10-year climbed 21 Canadian cents to yield 1.808
percent.
    The 10-year yield on Thursday touched ts highest since June
2015 at 1.859 percent.         
    Canada's wholesale trade report for October is due on
Tuesday, with economists forecasting that sales will pick up 0.6
percent after unexpectedly slumping the previous month. 
    Domestic reports on inflation for November and retail sales
and gross domestic product for October are due later in the
week.

 (Reporting by Fergal Smith; Editing by Jeffrey Benkoe)

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