November 20, 2018 / 9:36 PM / a month ago

CANADA FX DEBT-C$ nears five-month low as oil prices plunge

    * Canadian dollar falls 1 percent against the greenback
    * Loonie's decline is biggest since Feb. 2
    * Price of U.S. oil tumbles 6.6 percent
    * Canada's 10-year yield hits two-month low of 2.332 percent

    By Fergal Smith
    TORONTO, Nov 20 (Reuters) - The Canadian dollar weakened to
a nearly five-month low on Tuesday against a broadly stronger
greenback, as oil prices tumbled and a senior Bank of Canada
official made comments that some market players considered
dovish.
    The rise in interest rates "is resulting in difficult
adjustments in the finances of many," Bank of Canada Senior
Deputy Governor Carolyn Wilkins said in a speech.             
    The central bank has hiked by a total of 125 basis points
since July 2017 to leave its benchmark interest rate at a level
of 1.75 percent. Money markets expect another hike by March.
          
    The loonie was pressured by a combination of "pretty dovish
comments from Wilkins," a stronger U.S. dollar and lower oil
prices, said Christian Lawrence, senior market strategist at
Rabobank.
    Oil, one of Canada's major exports, was caught in a broader
Wall Street sell-off that was fed by rising concerns about
slowing global economic growth.      
    U.S. crude oil futures        settled 6.6 percent lower at
$53.43 a barrel.      
    At 3:53 p.m. (2053 GMT), the Canadian dollar          was
trading 1 percent lower at 1.3304 to the greenback, or 75.17
U.S. cents, its largest decline since Feb. 2.
    The currency touched its weakest intraday level since June
28 at 1.3318.
    The U.S. dollar        rallied as a sell-off in world stock
markets spurred safe-haven bids and investors worried about
slowing global growth.
    Canadian government bond prices were mixed across the yield
curve with the two-year            down 1 Canadian cent to yield
2.217 percent and the 10-year             rising 7 Canadian
cents to yield 2.349 percent.
    The 10-year yield touched its lowest intraday since Sept. 13
at 2.332 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 1 basis point to a spread of 71.2 basis
points in favor of the U.S. bond.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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