CANADA FX DEBT-C$ at highest close in 3 weeks; oil outlook supports

Tue Sep 6, 2016 5:01pm EDT
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* Canadian dollar at C$1.2915, or 77.43 U.S. cents
    * Bond prices slightly higher across the maturity curve

    By Alastair Sharp
    TORONTO, Sept 6 (Reuters) - The Canadian dollar rose on
Tuesday, notching its strongest close in almost three weeks
against a broadly weaker U.S. dollar, as investors cheered
stronger domestic data and signs that energy-producing countries
may work together to tackle a supply glut.
    The loonie has strengthened since data on Friday showed
exports jumped 3.4 percent in July. Weaker U.S. data has dimmed
expectations for a near-term rate hike from the Federal Reserve.
    "The move that we've seen is an extension of Friday's move,
which was a reflection of better trade numbers," said Mazen
Issa, senior foreign exchange strategist at Toronto-Dominion
    Tuesday's gain, after limited trading due to a public
holiday in Canada and the United States on Monday, was bolstered
by a sharp fall in U.S. service sector growth that hit the
    The Canadian dollar settled at C$1.2847 to the
greenback, or 77.84 U.S. cents, stronger than Monday's close of
C$1.2930, or 77.34 U.S. cents, according to Reuters data.
    It was its strongest close since Aug. 17.
    Its official close on Friday before the Labour Day holiday
was C$1.2990, or 76.98 U.S. cents.
    TD's Issa said that a growing recognition among
energy-producing countries that low prices aren't helpful should
also help the Canadian currency.
    "There is a growing case for the Canadian dollar to remain
resilient. A large part of that is a reflection of what could be
a shifting commodity landscape in coming weeks," he said.
    Oil had jumped on Monday after Saudi Arabia and Russia
agreed to cooperate in world oil markets before paring some of
those gains on Tuesday.  
    OPEC members are due to hold informal talks later this
    Canadian government bond prices were higher across the
maturity curve, with the two-year bond up 4.5
Canadian cents to yield 0.569 percent and the benchmark 10-year
 adding 33 Canadian cents to yield 1.028 percent.
    Earlier in the day, the 10-year yield reached its highest
since Aug. 22 at 1.113 percent.
    The Bank of Canada has a rate announcement scheduled for
Wednesday. A Reuters poll showed markets see the central bank on
hold until 2018. 
    Canada's August employment report is due on Friday.
Investors will be looking to see whether the labor market can
recover some of the 31,200 jobs it unexpectedly lost the month

 (Additional reporting by Fergal Smith; Editing by Andrea Ricci
and David Gregorio)