CANADA FX DEBT-Canada dollar stabilizes after recent slide to 4-month lows

Tue Nov 26, 2013 4:50pm EST
 
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* C$ at C$1.0530 vs US$, or 94.97 U.S. cents
    * Bond prices higher across the curve


    By Leah Schnurr
    TORONTO, Nov 26 (Reuters) - The Canadian dollar rose against
the greenback on Tuesday, retracing some of its recent weakness
after oil stabilized as investors concluded the deal to curb
Iran's nuclear program wouldn't result in an immediate increase
in crude supplies.
    Iran and six world powers struck a deal on Sunday under
which Tehran is to limit its nuclear energy program in exchange
for initial relief from international trade and financial
sanctions. 
    The deal caps Iran's exports at the current level of about 1
million barrels per day. 
    The Canadian currency had touched a more than four-month low
following news of the agreement, adding on to weakness in recent
sessions against a backdrop of likely low interest rates at home
for some time.
    But the loonie consolidated on Tuesday amid an absence of
domestic news and an upcoming holiday south of the border. Oil
prices - which can sway the commodity-sensitive currency - cut
earlier gains to settle slightly lower. 
    "Markets tend to shoot first, ask questions later," said
Darcy Briggs, portfolio manager at Franklin Bissett Investment
Management in Calgary. "You have a period of time where markets
can retrace an oversized move." 
    The Canadian dollar ended the North American
session at C$1.0530 versus the U.S. dollar, or 94.97 U.S. cents,
stronger than Monday's close of C$1.0548, or 94.80 U.S. cents.
It had earlier hit a session high of C$1.0520.
    With no domestic economic data on the calendar until the end
of the week, investors took in a slew of U.S. reports on
Tuesday.
    Permits for future U.S. home construction rose to their
highest level in nearly 5-1/2 years last month, while home
prices continued to rise in September. 
    Trading could be muted heading into the U.S. Thanksgiving
holiday on Thursday but the focus will be on Canada's gross
domestic product report, due on Friday.
    Growth in the third quarter is forecast to pick up to a 2.5
percent annualized rate, though some analysts say growth could
top expectations. 
    "It could be something that is reasonably positive for the
Canadian dollar," said Mark Chandler, head of Canadian fixed
income and currency strategy in Toronto, who is expecting a
reading of 2.8 percent.
    Canadian bond prices were higher across the maturity curve,
with the two-year bond up 1-1/2 Canadian cents to
yield 1.098 percent, while the benchmark 10-year bond
 gained 30 Canadian cents to yield 2.519 percent.