CANADA FX DEBT-C$ hits 6-month low as GDP lifts greenback, bank policies diverge
* Canadian dollar closes at C$1.1155 or 89.65 U.S. cents * Bond prices lower across the maturity curve By Solarina Ho TORONTO, Sept 26 (Reuters) - The Canadian dollar fell to a deeper six-month low against its U.S. counterpart on Friday as the greenback extended its longest win streak in more than four decades, bolstered by upwardly revised U.S. gross domestic product data. The U.S. economy grew at its fastest pace in 2-1/2 years in the second quarter, data showed on Friday, with all sectors contributing to the jump in output. Analysts said the figures provided a bullish signal for the remainder of the year. "It's the greenback right across the board ... it just seems like the momentum is really strong and the market's going with it," said Amo Sahota, director at Klarity FX in San Francisco. "The market was satisfied with this morning's GDP data...There's been too many surprises, too many unknowns out there, so to have it validated for the marketplace, I think that helped lift the U.S. dollar." The Canadian dollar, which was outperforming most major currencies, finished the week at C$1.1155 to the greenback, or 89.65 U.S. cents, after trading as soft as C$1.1169, or 89.53 U.S. cents, during the session. It was its weakest close since March 26 and nearly half a cent off Thursday's finish of C$1.1108, or 90.03 U.S. cents. The Canadian dollar has retreated about 2 percent over the past six sessions while the U.S. dollar was headed for its 11th straight weekly gain against a basket of currencies, its longest winning streak since 1971. For the last several months, the U.S. dollar has been propelled by growing expectations that the U.S. Federal Reserve will start to tighten monetary policy, while central banks elsewhere, including Canada, stay where they are. The Bank of Canada made a series of comments this week that signaled to markets it was in no rush to raise interest rates. "You'll see probably developing in the coming months, a policy divergence, where the Federal Reserve is gearing up toward hiking rates next year, while the Bank of Canada is really comfortable basically saying 'we're happy where we are'," said Charles St-Arnaud, Canadian economist and currency strategist at Nomura Securities International in New York. All eyes will be on Tuesday's gross domestic product numbers for July, the next key economic data for Canada. Canadian trade data is due next Friday. "Anything which relates to growth is going to be the focus point," Sahota said. "I think the combination of both of those will be really important figures as we get closer and closer to the next Bank of Canada meeting on Oct. 22." Canadian government bond prices were generally lower across the maturity curve, with the two-year off 2.7 Canadian cents, yielding 1.133 percent, and the benchmark 10-year down 17 Canadian cents, yielding 2.168 percent. (Reporting by Solarina Ho; Editing by Peter Galloway)
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