CANADA FX DEBT-C$ firms after U.S. data, bounces off five-year low

Wed Oct 15, 2014 10:04am EDT
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* Canadian dollar at C$1.1265 or 88.77 U.S. cents
    * Loonie hits 5-year low in early morning trading
    * 10-yr bond yield at lowest since May 2013

    By Leah Schnurr
    TORONTO, Oct 15 (Reuters) - The Canadian dollar firmed
against the greenback on Wednesday, bouncing off the more than
five-year low it hit earlier in the session as a drop in oil
prices was offset by weaker-than-expected U.S. economic data.
    Bond yields were also caught up in the global market rout,
with the yield on the benchmark 10-year Canadian government bond
 at its lowest since May 2013.
    Concerns about heavy oversupply sent U.S. crude down
36 cents to $81.84 a barrel, though the commodity moved off its
lows for the day, further helping the Canadian dollar.
    As an oil exporter, Canada's currency is often sensitive to
the price of the commodity.
    The Canadian dollar has shed about 6 percent since July as
it has suffered from a rally in the U.S. dollar as the U.S.
Federal Reserve winds down its stimulus program and moves closer
to raising interest rates.
    Losses accelerated on Tuesday, sparked by a steep drop in
oil prices and worries about the health of the global economy. 
    The loonie racked up a new low for 2014 in early morning
trading before clawing back its losses, but analysts expect the
currency's momentum is still to the downside.
    "I wouldn't bet against it getting weaker," said Mark
Chandler, head of Canadian fixed income and currency strategy at
Royal Bank of Canada in Toronto.
    "We have C$1.15 at the end of the year and we're getting
there quick."
    The Canadian dollar was at C$1.1265 to the
greenback, or 88.77 U.S. cents, stronger than Tuesday's close of
C$1.1306, or 88.45 U.S. cents.
    The loonie touched a session low of C$1.1385, its lowest
level since July 2009. But it was able to recover as the
greenback was hit by disappointing U.S. retail sales and
producer price figures. 
    The U.S. dollar shed more than 1 percent against a
basket of currencies.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 16-1/2 Canadian
cents to yield 0.901 percent, its lowest level since June 2012.
     The benchmark 10-year was up C$1.15 to yield 1.817 percent.

 (Editing by Peter Galloway)