CANADA FX DEBT-C$ ekes out small gain after U.S. GDP data

Thu Oct 30, 2014 9:58am EDT
 
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* Canadian dollar at C$1.1180 or 89.45 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Oct 30 (Reuters) - The Canadian dollar was
marginally stronger against the greenback on Thursday, recouping
earlier losses, after data showed the U.S. economy grew at a
more robust pace than expected in the third quarter.
    U.S. gross domestic product expanded at a 3.5 percent annual
rate, the fourth quarter out of five that it grew at, or above,
that level, and outpacing the 3 percent growth that economists
had forecast.
    But details in the report hinted at some loss of momentum,
with the pace of business-investment, housing and
consumer-spending growth slowing from the previous quarter.
 
    The loonie's rise on Thursday did not take it much beyond
Wednesday's finish.
    "Maybe markets were looking through the headline as they
should," said Benjamin Reitzes, senior economist and foreign
exchange strategist at BMO Capital Markets. "The details of the
report were not quite as firm as the headline. Domestic demand
was not all that great in the U.S." 
    At 9:23 a.m. (1323 GMT), the Canadian dollar was at
C$1.1180 to the U.S. dollar, or 89.45 U.S. cents, stronger than
Wednesday's finish of C$1.1191, or 89.36 U.S. cents.
    Reitzes said the currency was likely to be confined between
C$1.11 and C$1.14 for the remainder of the year unless there is
a major catalyst or another large fall in oil prices. He added
that attention will likely remain focused on the Fed in the near
term, noting the more hawkish tone of a Fed statement on
Wednesday.
    In the statement, the U.S. central bank said it was ending
its monthly bond purchase program and dropped a characterization
of U.S. labor market slack as "significant" in a show of
confidence in the economy.
    After markets closed on Wednesday, Bank of Canada Governor
Stephen Poloz welcomed the Fed's latest move, saying it showed
the U.S. economy is gaining traction, but he warned weaker oil
prices will crimp Canadian growth. 
    "From a policy perspective, the Bank of Canada is going
nowhere and I think everyone's perfectly aware of that," Reitzes
said.
    Canadian government bond prices were higher across the
maturity curve, with the two-year rising less than
half a Canadian cent to yield 1.041 percent and the benchmark
10-year rising 17 Canadian cents to yield 2.038
percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)