CANADA FX DEBT-Moderate gain in U.S. crude helps prop C$ after four-day retreat

Tue Dec 16, 2014 5:08pm EST
 
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(Adds fresh comment, closing figures, other details)
    * Canadian dollar at C$1.1636 or 85.94 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Dec 16 (Reuters) - The Canadian dollar gained some
modest ground against its U.S. counterpart on Tuesday after four
straight days of declines as U.S. oil prices finished a volatile
session stronger and weak data out of China raised hopes the
country's monetary policy will become more accommodative.
    Investors also booked some profit, while many also fled to
safety early in the session after the Russian central bank
raised interest rates 650 basis points to 17 percent in a failed
attempt to halt a collapse in the rouble.
    Activity in China's factory sector contracted this month for
the first time in seven months, the latest in a string of weak
economic indicators that added to concerns about oil demand from
the world's second-largest oil consumer. 
    "The (data) renewed stimulus hopes that we get some more
monetary policy accommodation from China, which then we'd see a
pickup in export demand from China, which would be a benefit to
the Australian and Canadian dollars," said Scott Smith, senior
market analyst at Cambridge Mercantile Group in Calgary, adding
it was difficult to know whether oil prices could fall further.
    "Technically speaking we could be close to finding a bottom,
but from a fundamental perspective, there's not a good narrative
at this point to really suggest we have seen a bottom in oil."
    The Canadian dollar finished at 1.1636 to the
greenback, or 85.94 U.S. cents, slightly stronger than Monday's
close of C$1.1656, or 85.79 U.S. cents. Earlier, it traded near
levels not seen since July 10, 2009.
    "What you're seeing is a classic risk-off scenario ... Right
now, we're brushing up against technical resistance levels, so
there has been some measure of profit taking," said Bipan Rai,
director of foreign exchange strategy at CIBC World Markets.
    In Canada, data showed that factory sales fell by a
more-than-expected 0.6 percent in October from September.
Foreign investment in Canadian securities strengthened to C$9.53
billion from C$4.64 billion between October and September.
  
    All eyes will turn to the U.S. Federal Reserve on Wednesday,
when the Federal Open Market Committee meeting concludes. Market
participants are keen to see when the central bank will consider
moving away from its near zero interest rate policy.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 4.5 Canadian
cents to yield 0.954 percent and the benchmark 10-year
 rising 33 Canadian cents to yield 1.748 percent.

 (Reporting by Solarina Ho; editing by James Dalgleish and
Matthew Lewis)