CANADA FX DEBT-C$ firms broadly as markets remain choppy
(Updates with closing figures, strategist comment, details) * Canadian dollar at C$1.3315 or 75.10 U.S. cents * Bond prices lower across the maturity curve By Solarina Ho TORONTO, Aug 26 (Reuters) - The Canadian dollar firmed against the greenback on Wednesday, and led its commodity counterparts in outperforming key currencies, as investors dipped their toes back into riskier assets. The move came as some calm took hold in currency markets and North American equity markets rallied on upbeat data and Federal Reserve comments following a volatile start to the week on worries about China's economic growth. The loonie's strength came even as the U.S. dollar rebounded and the price of crude, a major Canadian export, fell nearly 2 percent, rupturing the currency's usually tight correlation with oil and the greenback. "It's been a bit of a puzzler for us too. It's the best performing still of the majors against the U.S. dollar today," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets. "In the last couple of days, it's been trading more as a risk proxy, so when the U.S. dollar and equity markets are bouncing, Canada has been typically outperforming ... trading closer with equities markets, which is unusual for the Canadian dollar. It's something that we don't expect to last." The Canadian dollar finished trading at C$1.3322 to the greenback, or 75.06 U.S. cents, modestly stronger than the Bank of Canada's official close of C$1.3346, or 74.93 U.S. cents on Tuesday. The currency traded between C$1.3252 and C$1.3350 throughout the session, as external drivers dictated the loonie's direction in the absence of domestic economic data this week. In the United States, a gauge of U.S. business investment plans in July posted its largest increase in just over a year, underscoring the durability of the economic recovery despite a slowing global economy. Comments by a Federal Reserve official also indicated that the recent global market turmoil made a September interest rate hike less likely. Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 8 Canadian cents to yield 0.392 percent and the benchmark 10-year falling C$1.11 to yield 1.447 percent. The Canada-U.S. two-year bond spread narrowed to -28.8 basis points, while the 10-year spread narrowed to -73.5 basis points. (Reporting by Solarina Ho; Editing by Meredith Mazzilli and David Gregorio)
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