February 28, 2018 / 2:34 PM / 18 days ago

CANADA FX DEBT-C$ hits 9-week low as capital spending intentions slow

    * Canadian dollar at C$1.2786, or 78.21 U.S. cents
    * Loonie touches its weakest since Dec. 22 at C$1.2791
    * Bond prices higher across a flatter yield curve

    By Fergal Smith
    TORONTO, Feb 28 (Reuters) - The Canadian dollar weakened to
a nine-week low against its U.S. counterpart on Wednesday as the
greenback broadly firmed and domestic data showed a slower pace
of domestic capital expenditure.
    The U.S. dollar        rose against a basket of major
currencies, boosted by an upbeat assessment of the U.S. economy
on Tuesday by Fed Chairman Jerome Powell.                 
    The pace of capital expenditures in Canada is expected to
cool in 2018 as a slowdown in spending intentions from the
public sector are offset by increased investment in machinery
and equipment, data from Statistics Canada showed.             
    "Forget about Canadian businesses opening their wallets this
year," Avery Shenfeld, chief economist at CIBC Capital Markets,
said in a research note. 
    In separate data, Canadian producer prices rose 0.3 percent
in January, lifted by higher prices for energy and petroleum
products. The increase was short of economists' forecasts for a
gain of 0.5 percent.             
    At 9:23 a.m. EST (1423 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.2786 to the greenback, or
78.21 U.S. cents.
    The currency's strongest level of the session was C$1.2763,
while it touched its weakest since Dec. 22 at C$1.2791.
    The modest loss for the loonie came one day after Canada's
Liberal government tackled long-term growth challenges in a
budget aimed at boosting women in the workforce and diversifying
trade, while keeping its fiscal powder dry in case of an
economic shock like the demise of the North American Free Trade
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 1.5 Canadian cents
to yield 1.798 percent and the 10-year             rising 14
Canadian cents to yield 2.254 percent.
    Canada is cutting down issuance of bonds in the 2018-19
fiscal year by 17 percent as the government runs a smaller
budget deficit and market participants demand greater supply of
more liquid T-bills.             
    U.S. crude        prices were up 0.35 percent at $63.23 a
barrel. Oil is one of Canada's major exports.             
    Figures for Canada's fourth-quarter economic growth will be
released on Friday, with analysts expecting the annualized rate
to come in below the Bank of Canada's 2.5 percent forecast.

 (Reporting by Fergal Smith; Editing by Jonathan Oatis)
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