CANADA FX DEBT-C$ hits 4-month low as Chinese factory data weighs on sentiment

* The Canadian dollar weakens 0.3% against the greenback

* Reached its lowest level since Dec. 22 at 1.2905

* US oil price drops 3.5%

* Canadian bond yields rise across the curve

TORONTO, May 2 (Reuters) – The Canadian dollar weakened to its lowest level in more than four months against its U.S. counterpart on Monday, as the safe-haven greenback rallied broadly and data from Chinese factories added to investor concerns about the global economic outlook.

the loon traded down 0.3% to 1.29 against the greenback, or 77.52 US cents, after hitting its lowest level since Dec. 22 at 1.2905.

Chinese factory activity contracted at a faster pace in April as widespread COVID-19 lockdowns halted industrial production and disrupted supply chains, raising fears of a sharp economic slowdown in the second quarter that will weigh on global growth.

Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to global economic prospects.

American crude Prices fell 3.5% to $101.08 a barrel as the gloomier demand outlook overshadowed fears that supply could be reduced by a possible European Union ban on Russian crude.

Meanwhile, the US dollar rose against a basket of major currencies ahead of the Federal Reserve’s policy meeting on Tuesday and Wednesday. Markets are pricing in an aggressive series of interest rate hikes from the Fed as it attempts to rein in soaring inflation.

Speculators have cut their bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed Friday. As of April 26, net long positions had fallen to 20,881 contracts from 21,226 the previous week.

Yields on Canadian government bonds rose across the curve, following the performance of US Treasuries. The 10 years
rose 2 basis points to 2.892%, closing in on the 11-year high hit last month at 2.944%. (Reporting by Fergal Smith Editing by Paul Simao) (([email protected]; +1 647 480 7446;)) Keywords: CANADA FOREX/

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