CANADA FX DEBT-C$ strengthens to nearly 3-week high as oil rises

Tue Oct 18, 2016 9:44am EDT
 
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* Canadian dollar at C$1.3076, or 76.48 U.S. cents
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Oct 18 (Reuters) - The Canadian dollar strengthened
to a nearly three-week high against its U.S. counterpart on
Tuesday as risk appetite and oil rose and domestic manufacturing
data reinforced expectations that broad economic growth
rebounded in the third quarter.
    Manufacturing sales rose by 0.9 percent from July to hit
C$51.12 billion, stronger than the 0.2 percent gain market
analysts polled by Reuters had forecast. In volume terms, sales
climbed by 1.2 percent.
    "All in all it is a pretty decent report," said Andrew
Kelvin, senior rates strategist at TD Securities.
    Kelvin doubted the data will have much impact on the Bank of
Canada, which makes its interest rate decision on Wednesday. The
central bank is expected to hold interest rates at 0.50 percent
as it waits to see how the economic bounce-back it is
anticipating in the second half of the year unfolds.
    U.S. crude prices were up 1.06 percent to $50.47 a
barrel, helped by a weaker dollar and the notion that global
markets oversupply may be moderating, ahead of a November
meeting of OPEC producers that could decide to cut production.
 
    Rising commodity prices helped pull global stock markets
higher. 
    Some losses for the U.S. dollar were pared as a rise in U.S.
consumer prices suggested a steady build-up of inflation
pressures that could keep the Federal Reserve on track to raise
interest rates in December. 
    At 9:27 a.m. EDT (1327 GMT), the Canadian dollar 
was trading at C$1.3076 to the greenback, or 76.48 U.S. cents,
stronger than Monday's close of C$1.3130, or 76.16 U.S. cents.
    The currency's weakest level of the session was C$1.3133,
while it touched its strongest since Sept. 29 at C$1.3051.
    EU governments were set to fail to approve a free trade deal
with Canada as they struggled to overcome regional opposition in
Belgium that threatens to scupper the entire deal. 
    Canadian government bond prices were lower across the yield
curve, with the two-year price down 0.5 Canadian cent
to yield 0.604 percent and the benchmark 10-year 
falling 16 Canadian cents to yield 1.239 percent.

 (Reporting by Fergal Smith; Editing by Bill Trott)