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CANADA FX DEBT-C$ dips as boost from U.S. presidential debate fades

Published 2016-09-28, 10:16 a/m
© Reuters.  CANADA FX DEBT-C$ dips as boost from U.S. presidential debate fades
USD/CAD
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* Canadian dollar at C$1.3218, or 75.65 U.S. cents

* Bond prices mixed across the maturity curve

TORONTO, Sept 28 (Reuters) - The Canadian dollar weakened slightly against its U.S. counterpart on Wednesday despite higher oil prices as a boost from the U.S. presidential debate faded.

A view that Democratic U.S. presidential candidate Hillary Clinton fared better than rival Donald Trump in a television debate supported Mexico's peso MXN= and the Canadian dollar on Tuesday. Both countries have strong trade ties to the United States.

Trump has said he would renegotiate or scrap the North American Free Trade Agreement if he is elected.

Markets were looking ahead to an appearance by U.S. Federal Reserve Chair Janet Yellen and a meeting of oil producers in Algiers. Crude is a major Canadian export.

U.S. crude CLc1 prices were up 1.12 percent at $45.17 a barrel after sharp losses in the previous session, as industry data showed a surprise draw in U.S. crude stocks, although worries over a lack of agreement among producers to curb output kept a lid on gains. O/R

At 10:01 a.m. EDT (1401 GMT), the Canadian dollar CAD=D4 was trading at C$1.3218 to the greenback, or 75.65 U.S. cents, slightly weaker than Tuesday's close of C$1.3203, or 75.74 U.S. cents.

The currency's strongest level of the session was C$1.3195, while its weakest was C$1.3235.

On Tuesday, the loonie touched its weakest intraday level in nearly six months at C$1.3281, following dovish comments by Bank of Canada Governor Stephen Poloz on Monday evening. the currency ended up 0.3 percent on Tuesday.

Canadian policymakers are facing increased pressure to support the country's lackluster economy as infrastructure spending takes time to kick in and record high debt loads dampen the impact of stimulus checks. Wednesday, the U.S. government reported that U.S. core capital goods orders rose for the third straight month in August, a positive signal for the business investment outlook. pickup in U.S. business investment would improve the outlook for Canada's non-energy exports. government bond prices were mixed across the yield curve, with the two-year CA2YT=RR down 0.5 Canadian cent to yield 0.500 percent and the benchmark 10-year CA10YT=RR falling 3 Canadian cents to yield 0.97 percent.

Still, the 10-year yield earlier touched a new historic low intraday at 0.915 percent.

Canada's gross domestic product data for July is due on Friday. The economy is expected to have grown by 0.3 percent, which would reinforce expectations that it rebounded in the third quarter after contracting in the second. ECONCA

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