CANADA FX DEBT-C$ stronger as oil price stable after surge
(Adds strategist comment, updates prices to close) * Canadian dollar ends at C$1.3167, or 75.95 U.S. cents * Bond prices lower across the maturity curve By Alastair Sharp TORONTO, Oct 29 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday, as oil prices supported the commodity-linked currency and the greenback pulled back a day after a hawkish U.S. Federal Reserve statement. "A supportive oil story has helped the Canadian dollar come back a fair bit," said Don Mikolich, executive director for foreign exchange sales at CIBC World Markets, adding that narrowing interest rate spreads had also helped. U.S. crude prices settled barely higher on Thursday, but that was taken positively after its biggest rally in two months the day before. The loonie, as Canada's currency is colloquially known, settled at C$1.3167, or 75.95 U.S. cents, stronger than Wednesday's close of C$1.3192, or 75.80 U.S. cents. But Mikolich said the Canadian dollar would likely face further headwinds in coming months, given broader economic worries and little impetus for oil to move significantly higher. "It's hard to envisage things getting overly Canada-positive at this stage," he said. U.S. gross domestic product increased at a 1.5 percent annual rate after expanding at a 3.9 percent clip in the second quarter. Canadian producer prices slipped 0.3 percent, more than the 0.1 percent expected, on lower prices for energy and petroleum products. Canadian government bond prices were lower across the maturity curve, with the two-year price down 5.5 Canadian cents to yield 0.573 percent and the benchmark 10-year falling 60 Canadian cents to yield 1.547 percent. The Canada-U.S. two-year bond spread was -15.5 basis points, while the 10-year spread was -62.2 basis points. (Reporting by Alastair Sharp; Editing by Bernadette Baum)
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