CANADA FX DEBT-C$ firms on Carney comment, easing of euro zone fears
* C$ ends at C$0.9880 vs US$, or $1.0121 * Euro zone fears ease with Dutch bond sale * U.S. housing data helps risk sentiment * Bank of Canada comments boost currency * Bond prices mostly lower By Jon Cook TORONTO, April 24 (Reuters) - The Canadian dollar advanced against its U.S. counterpart for a third straight session on Tuesday as global growth concerns eased and after the head of the Bank of Canada reinforced the bank's more positive outlook for the domestic economy and the possibility of raising interest rates. Global stocks rebounded from Monday's sharp sell-off after the Netherlands sold bonds without problems, calming markets a day after the Dutch government collapsed in a crisis over budget cuts. Data on the U.S. housing market also raised optimism about the U.S. economic recovery and helped stoke risk appetite. U.S. single-family home prices rose in February for the first time in 10 months, according to the closely watched S&P/Case-Shiller report. The Canadian dollar finished at C$0.9880 against the U.S. dollar, or $1.0121, up from Monday's North American close at C$0.9910 against the greenback, or $1.0091. "All of those things have small impacts on the U.S.-Canada pair, but we'll be stuck in this range until we do see a much stronger signal of a divergence between Canada and the U.S.," said Greg Moore, foreign exchange strategist at TD Securities. Since the end of January, the Canadian dollar has hovered within a 2-cent range on either side of parity with the greenback, between C$0.9842 and C$1.0053. Moore said the currency was still being supported by the Bank of Canada's more hawkish tone in last week's rate announcement and Monetary Policy Report, when the central bank signaled it may be close to raising its key lending rate, which has been frozen at 1 percent for the last 19 months. "It's been a grind higher for the Canadian dollar over the past two days and a lot of that is lingering sentiment of the hawkishness from last week, especially compared to some of the tone of central banks from around the world," Moore added. On Tuesday, Bank of Canada Governor Mark Carney repeated to the House of Commons finance committee that the central bank might have to increase interest rates because of the stronger performance of the economy and firmer underlying inflation. Carney's remarks and the U.S. data offset soft Canadian retail sales figures on Tuesday, as disappointing car sales led to an unexpected 0.2 percent fall in retail trade in February. Making for an even soggier reading, the volume of sales, used in calculating real gross domestic product, slumped by 0.6 percent from January. Some analysts said the data supported not raising rates until economic conditions improve. "There's cause to believe that it was a bit premature to be talking rate hikes in the current fragile environment, and a weak retail sales print supports that thesis," said Derek Holt, vice president of economics at Scotiabank. Canadian government bond prices were mostly lower with the two-year bond down 10 Canadian cents to yield 1.415 percent. The benchmark 10-year bond fell 24 Canadian cents to yield 2.068 percent.
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