CANADA FX DEBT-C$ strengthens as Fed stance pressures greenback
* Canadian dollar at C$1.2998, or 76.93 U.S. cents * Bond prices higher across a flatter yield curve * 10-year yield touches its lowest in more than one week TORONTO, Feb 2 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil rose and the greenback lost further ground since the Federal Reserve interest rate decision a day ago. The U.S. dollar fell to its lowest since mid-November after the Fed disappointed investors hoping for a clear sign of a March interest rate rise, while signs that the new U.S. administration favors a weaker greenback also weighed on the currency. U.S. crude prices were up 0.48 percent at $54.14 a barrel as evidence that OPEC and other big exporters were cutting production more than offset a sharp rise in U.S. crude and gasoline stockpiles. Oil is one of Canada's major exports. At 9:05 a.m. ET (1405 GMT), the Canadian dollar was trading at C$1.2998 to the greenback, or 76.93 U.S. cents, stronger than Wednesday's close of C$1.3047, or 76.65 U.S. cents. The currency traded in a range of C$1.2981 to C$1.3050. Gains for the loonie came after domestic data this week showed that the economy expanded faster than expected in November, and that the manufacturing sector grew at its fastest pace in over two years in January. In addition, Canadian car and light truck sales rose 2.2 percent in January over last year to an all-time record for the month, DesRosiers Automotive Consultants said on Wednesday. On Tuesday, Bank of Canada Governor Stephen Poloz made clear that the central bank sees no need to follow the Fed with interest rate hikes, and he reiterated that the firmer Canadian dollar was a headwind for the export sector. The loonie rose 3.2 percent in January after climbing 3.1 percent in 2016. On Tuesday, it touched its strongest level since Sept. 9 at C$1.2969. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 1.5 Canadian cents to yield 0.767 percent, and the 10-year climbed 34 Canadian cents to yield 1.720 percent. The 10-year yield touched its lowest intraday since Jan. 24 at 1.712 percent. (Reporting by Fergal Smith Editing by W Simon)
© Thomson Reuters 2017 All rights reserved.