CANADA FX DEBT-C$ edges higher on oil price, domestic GDP data

Tue Dec 23, 2014 4:39pm EST
 
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* Canadian dollar at C$1.1630 or 85.98 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    OTTAWA, Dec 23 (Reuters) - The Canadian dollar firmed
modestly against the greenback on Tuesday, helped by a pick-up
in oil prices and data showing stronger-than-expected Canadian
economic growth in October.
    The loonie's gains, however, were tempered by revised
figures that showed growth in U.S. third-quarter gross domestic
product at an annualized 5 percent, the fastest pace in 11
years. The report bolstered the U.S. dollar and was the main
focus of financial markets. 
    Overall, the Canadian dollar stuck to its recent trading
range as volumes were winding down heading toward the end of a
holiday-shortened week. Canadian bond and equity markets will
close early on Wednesday before the Christmas and Boxing Day
holidays.
    The final Canadian economic report of the year showed GDP
rose 0.3 percent in October, helped by a surprising surge in
manufacturing. 
    "The month-over-month results do show growth at a time when
most people would have expected the Canadian economy to
struggle, so the growth has been positive and we're seeing a
reaction in the loonie," said Lennon Sweeting, corporate dealer
at USForex in San Francisco. 
    The Canadian dollar ended the North American
session at C$1.1630 to the greenback, or 85.98 U.S. cents,
stronger than Monday's close of C$1.1637, or 85.93 U.S. cents.
    The day's slight gain pales in comparison with the loonie's
long retreat over the past six months in the face of plunging
oil prices. The Canadian dollar is down 8.6 percent for 2014,
putting it on track for its worst year since 2008, as it has
been hit hard by the drop in the price of oil, a major Canadian
export.
    The strong U.S. growth figures gave oil a reprieve on
Tuesday, with crude settling up $1.86 at $57.12 a barrel.
    Analysts expect the loonie will push lower in 2015 as an
expected interest rate increase in the United States will whet
investor appetite for the greenback. The Bank of Canada is
expected to lag the U.S. Federal Reserve in raising rates.
    Sweeting expects the Canadian dollar could weaken toward
C$1.18 in first half of next year.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 8 Canadian
cents to yield 1.057 percent and the benchmark 10-year
 down 96 Canadian cents to yield 1.903 percent.

 (Editing by Peter Galloway)