CANADA FX DEBT-C$ rises vs stronger US$ as China, U.S. data boost risk appetite
(Adds strategist comment, CFTC data, updates prices to close) * Canadian dollar settles at C$1.3145, or 76.07 U.S. cents * Loonie gains 1.1 percent for the week * Bond prices lower across maturity curve By Alastair Sharp TORONTO, Oct 14 (Reuters) - The Canadian dollar gained against a broadly stronger U.S. counterpart on Friday as investor appetite for risk was restored due to Chinese and U.S. economic data that was more robust than expected. The loonie, as the currency is colloquially known, gained more than 1 percent on the week, with much of that coming in the last two days. But the bounce off lows last seen in March was an opportunity to buy cheaper U.S. dollars for Bipan Rai, director of foreign exchange strategy at CIBC Capital Markets. "A 2 cent move over the last couple of days really doesn't seem that big in the grand scheme of things," he said, suggesting the Bank of Canada may surprise with a steeper-than-expected cut to growth forecasts when it presents a quarterly economic update next week. In July, the central bank had anticipated 1.3 percent growth in 2016 and 2.2 percent growth next year. "We do know that a revision to the forecast is coming, it's all about the scale of that revision now," Rai said. The Canadian dollar settled at C$1.3145 to the greenback, or 76.07 U.S. cents, stronger than Thursday's close of C$1.3205, or 75.73 U.S. cents. The currency touched its strongest since Oct. 3 at C$1.3104 during the session. U.S. retail sales and producer prices in September supported the view of a modest U.S. economic expansion, which helped both currencies. A pickup in China's consumer prices eased concerns about the health of the world's second-largest economy after disappointing trade numbers on Thursday. Speculators cut bearish bets on the Canadian dollar, Commodity Futures Trading Commission data showed. Net short Canadian dollar positions dipped to 11,704 contracts in the week ended Oct. 11 from 14,077 in the prior week. The loonie's normally tight link with the price of oil, one of Canada's major exports, has weakened ahead of the U.S. presidential election and a potential interest rate hike by the Federal Reserve. Sales of existing Canadian homes rose 0.8 percent in September from August, a report from the Canadian Real Estate Association showed. Canadian government bond prices were lower across the yield curve, with the two-year down 4.5 Canadian cents to yield 0.621 percent and the benchmark 10-year declining 65 Canadian cents to yield 1.251 percent. (Additinal reporting by Fergal Smith; Editing by Phil Berlowitz and David Gregorio)
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