CANADA FX DEBT-C$ surges for second day as oil prices rally
(Adds closing figures, fresh comments, details) * Canadian dollar ends at C$1.2396 or 80.67 U.S. cents * Bond prices mostly lower across the maturity curve By Solarina Ho TORONTO, Feb 3 (Reuters) - The Canadian dollar jumped more than 1 percent for a second straight session against a tumbling U.S. dollar on Tuesday, as oil surged on growing confidence that prices have bottomed out. U.S. crude finished up 7 percent, bringing its four-day rally to about 19 percent. Prices began climbing earlier after British oil company BP became the latest petroleum producer to announce a reduction in capital expenditures, adding to expectations that spending cuts will help trim output and deplete some of the excess supply that has driven crude prices down about 50 percent since June. Canada is a major crude exporter, and its currency has tracked plummeting oil prices. But the loonie has rebounded since last week, when it touched a near six-year low of C$1.28 against the greenback, or 78.13 U.S. cents. "We've seen some pretty fantastic moves across a range of assets today ... quite eye-catching, so in the context of the mood that had been prevailing over the past two weeks, these are quite surprising moves," said Shaun Osborne, chief currency strategist at TD Securities. The Canadian dollar finished at C$1.2396 to the greenback, or 80.67 U.S. cents, more than 1 percent stronger than Monday's close of C$1.2577, or 79.51 U.S. cents. The move is unlikely to last, however, say strategists, noting that the Bank of Canada is widely expected to cut interest rates again as early as next month. "If they missed the boat the first time, right after the Bank of Canada rate cut, this is an additional opportunity to scale into those long USD/CAD positions," said Bipan Rai, director of foreign exchange strategy at CIBC World Markets. "We definitely see scope for weakening to C$1.30, particularly in (the) coming month or so," Rai said. On the data front, investors are awaiting Canadian trade numbers for December as well as January employment figures for the United States and Canada later in the week for more insight into the health of the neighboring economies. Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 8 Canadian cents to yield 0.433 percent and the benchmark 10-year sliding 76 Canadian cents to yield 1.311 percent. (Editing by Peter Galloway and Jonathan Oatis)
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