CANADA FX DEBT-C$ hits near 3-month high as oil rises, US$ slides
(Adds strategist comment, updates prices to close) * Canadian dollar ends at C$1.3132, or 76.15 U.S. cents * Loonie hits its strongest since Oct. 19 at C$1.3028 * Bond prices higher across a flatter yield curve By Alastair Sharp TORONTO, Jan 12 (Reuters) - The Canadian dollar touched a near 3-month high against its U.S. counterpart on Thursday as oil prices rose and the greenback extended losses that began after U.S. President-elect Donald Trump's news conference a day earlier. The U.S. dollar tumbled against a basket of major currencies, pressured by a loss of confidence in the U.S. reflation trade which has dominated markets since Trump's election. The Canadian dollar settled at C$1.3132 to the greenback, or 76.15 U.S. cents, stronger than Wednesday's close of C$1.3177, or 75.89 U.S. cents. The price of oil, one of Canada's major exports, rose on reports key OPEC members were cutting production as promised and on forecasts of strong demand growth in China. U.S. crude prices settled up 1.45 percent at $53.01 a barrel. "Oil prices are a little bit higher and spreads have come down a little bit, but that does not explain the entirety of the Canadian dollar strength that we've seen so far this year," said Shaun Osborne, chief currency strategist at Scotiabank, calling it "completely antithetical to what we would have expected." The loonie nearly breached $1.36 late last year, and Osborne said he saw fair value for the currency at around C$1.34. The currency's weakest level of the session was C$1.3195, while it touched its strongest since Oct. 19 at C$1.3028. Gains for the loonie follow upbeat domestic data since the start of the year, including a surge in jobs in December and the first trade surplus in more than two years in November while a Bank of Canada survey pointed to improving business conditions. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 1.2 Canadian cents to yield 0.774 percent and the 10-year added 14 Canadian cents to yield 1.662 percent. Canadian new housing prices rose 0.2 percent in November from October amid price increases across much of Ontario, Statistics Canada said. Separately, the Teranet-National Bank Composite House Price Index showed home prices rose 0.3 percent in December from a month earlier as prices continued to soar in Toronto, the biggest market, and Victoria, while Vancouver prices fell again. (Additional reporting by Fergal Smith; Editing by Bernadette Baum and Tom Brown)
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