CANADA FX DEBT-C$ propped by rebound in crude following five-year lows
(Updates with fresh comment, closing figures, additional details) * Canadian dollar at C$1.1440 or 87.41 U.S. cents * Bond prices higher across the maturity curve By Solarina Ho TORONTO, Dec 9 (Reuters) - The Canadian dollar strengthened on Tuesday after touching its weakest level against the U.S. dollar in more than five years, helped by a bounce in crude prices after Monday's big sell-off. Oil, which has tanked more than 40 percent since June and sank about 4 percent in the previous session, set new five-year lows on Tuesday before recovering as market participants searched for some stability. The Canadian dollar has been particularly sensitive to movements in the price of oil due to the country's heavy concentration of producers. "It's trading off oil right now; there's not a whole lot of data to go off of this week," said Benjamin Reitzes, senior economist at BMO Capital Markets. "Given the price of oil and the likelihood that the trend is lower and momentum is lower, I think it's perfectly reasonable that we're where we are now between C$1.14 and C$1.15." The Canadian dollar, which briefly broke the key psychological C$1.15 level during overnight trading, ended the session at C$1.1440 to the greenback, or 87.41 U.S. cents. This was stronger than Monday's close of C$1.1482, or 87.09 U.S. cents, its weakest close since July 13, 2009. A combination of drivers is expected to keep the Canadian dollar under pressure, according to David Tulk, chief Canada macro strategist with TD Securities, pointing to expected further weakness for crude, an economy that lags the United States and recent disappointing results from Canadian banks. Reasonably upbeat U.S. retail sales data on Thursday and a slightly more hawkish Federal Reserve would give even more lift to the U.S. dollar, Tulk said. Also helping the loonie was a weaker U.S. dollar, which fell for a second straight day as investors booked profits from the currency's recent gains. Cautious comments from two centrist Federal Reserve policymakers on Monday helped put a slight damper on the rally as well. Fed policy makers have been discussing when the U.S. central bank my drop the closely watched phrase "considerable time" when describing how long interest rates will remain near zero. The Fed's next policy meeting is scheduled for next week. Canadian government bond prices were higher across the maturity curve, with the two-year rising half a Canadian cent to yield 1.022 percent and the benchmark 10-year adding 12 Canadian cents to yield 1.881 percent. (Reporting by Solarina Ho; Editing by Lisa Von Ahn and James Dalgleish)
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