CANADA FX DEBT-C$ steadies as oil rises; ends week 1.2 pct lower

[December 17, 2016]  By Fergal Smith
TORONTO, Dec 16 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Friday as oil rose and investors took stock of sharp losses for the currency over the previous
two days after the Federal Reserve raised interest rates.

For the week, the loonie fell 1.2 percent. It slumped from its strongest level in eight weeks at C$1.3081 per U.S. dollar before the Fed decision on Wednesday to hit its weakest in two
weeks at C$1.3417 on Thursday.

U.S. crude oil futures settled up $1 at $51.90 a
barrel after Goldman Sachs boosted its price forecast for 2017 and producers showed signs of adhering to a global deal to reduce output.

Oil is one of Canada's major exports.
Investors who sold Canadian dollars have been "taking some chips off the table ahead of the weekend as liquidity conditions begin to dry up into the holidays," said Mazen Issa, senior
foreign exchange strategist at TD Securities.

The Canadian dollar ended at C$1.3344 to the
greenback, or 74.94 U.S. cents, slightly stronger than Thursday's close of C$1.3347, or 74.92 U.S. cents.

The currency's strongest level of the session was C$1.3320, while its weakest was C$1.3392.
"It is still a (U.S.) dollar stronger environment until
proven otherwise" after the Fed signaled interest rate increases would follow at a faster pace next year, Issa said.

He expects the loonie to weaken to C$1.3650 per U.S. dollar.

Speculators raised bearish bets on the Canadian dollar to the most since March, according to Commodity Futures Trading Commission data and Reuters calculations. 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 mixed across a steeper yield curve. The two-year rose 1 Canadian cent to yield 0.819 percent, while the 30-year fell 32 Canadian cents to yield 2.425 percent.

The 30-year yield touched its highest intraday since November 2015 at 2.438 percent.
Foreigners maintained their healthy appetite for Canadian securities in October, snapping up C$15.75 billion worth of bonds, stocks and money market paper, Statistics Canada said.

(Reporting by Fergal Smith; Editing by Paul Simao and Meredith
Mazzilli)

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