CORRECTED-CANADA FX DEBT-C$ rallies, tracking rebound in crude oil prices

Tue Dec 29, 2015 4:56pm EST
 
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(Corrects attribution for quote in paragraph five to Eric
Viloria)
    * Canadian dollar at C$1.3823 or 72.34 U.S. cents
    * Bond prices lower across the maturity curve

    By Fergal Smith
    TORONTO, Dec 29 (Reuters) - The Canadian dollar rose against
its U.S. counterpart on Tuesday, helped by an increase in crude
oil prices, even as the greenback firmed against a basket of
other major currencies.
    Crude oil prices rallied as colder weather prompted buying a
day after prices slid 3 percent, but weak global demand and
abundant supplies from OPEC members were expected to remain an
obstacle. 
    "Where oil goes that's where Canada goes," said Ronald
Simpson, managing director, global currency analysis at Action
Economics, referring to the strong correlation between its
currency and oil, one of Canada's major exports. 
    U.S. crude prices settled at $37.87 a barrel, up 2.9
percent, while Brent crude added 3.19 percent to
$37.79.    
    "Equities are a little bit higher and this is also helping
to support some of the more risk sensitive and commodity
sensitive currencies," said Eric Viloria, currency strategist at
Wells Fargo Securities.
    The Canadian dollar closed at C$1.3823 to the
greenback, or 72.34 U.S. cents, after having last traded at
C$1.3904, or 71.92 U.S. cents, on Monday, according to Thomson
Reuters data.
    The Bank of Canada's official close on Dec. 24, before the
Christmas break, was C$1.3845, or 72.23 U.S. cents.
    The currency's highest level of the session was C$1.3815,
just shy of Monday's strongest level of C$1.3812,  while its
weakest level was C$1.3941.
    Against the euro, the Canadian dollar rallied to C$1.5117.
It fell to near a four-month low last week at C$1.5320.
    Speculators have raised bearish bets on the Canadian dollar
following the U.S. Federal Reserve rate increase, according to
the latest data from the Commodity Futures Trading Commission
released on Monday.        
    Canadian government bond prices were lower across the
maturity curve, pressured by a pick-up in risk appetite, while
the market also contended with firmer-than-expected U.S. home
prices and consumer confidence, as well as a U.S. 5-year note
auction.
    The two-year bond price was down 3 Canadian cents
to yield 0.50 percent and the benchmark 10-year fell
29 Canadian cents to yield 1.41 percent.
    The Canada-U.S. 10-year spread was 5.4 basis points wider at
-90.0, as Treasuries more than unwound Monday's rally, extending
recent outperformance for Canadian government bonds and trading
at a record wide gap.

 (Reporting by Fergal Smith; Editing by Dan Grebler and Steve
Orlofsky)