CANADA FX DEBT-C$ gains as Keystone vote eyed, jobs data stays in focus

Wed Nov 12, 2014 4:33pm EST
 
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(Adds details, fresh comment, closing figures)
    * Canadian dollar at C$1.1316 or 88.37 U.S. cents
    * Bond prices rise across the maturity curve

    By Solarina Ho
    TORONTO, Nov 12 (Reuters) - The Canadian dollar firmed
moderately against the U.S. dollar on Wednesday despite softer
crude oil prices, buoyed by a possible U.S. Senate vote on the
Keystone XL oil pipeline and as investors continued to digest
last Friday's surprisingly robust domestic jobs report.
    The commodities-linked currency, hurt by a broad U.S. dollar
rally over the last several months, has also been hit hard by a
sharp drop in crude prices. Canada is a major oil exporter.
    But news that the U.S. Senate may vote on Thursday to
approve the controversial pipeline from Canada could give the
loonie a lift. 
    "The sense is that the momentum is shifting in the Keystone
debate and that it will be approved," said Adam Button, currency
analyst at ForexLive in Montreal.
    "Approving the Keystone pipeline would be tremendously good
news for the Canadian dollar. It would immediately generate
investment flows into the oil sands."
    The Canadian dollar finished the session at
C$1.1316 to the greenback, or 88.37 U.S. cents, stronger than
Tuesday's market close of C$1.1335, or 88.22 U.S. cents.
    "Overall, today's Canadian dollar performance is impressive.
The U.S. dollar's been broadly stronger. I think the Canadian
dollar has managed to weather the storm," said Button. 
    The loonie, which hit a more than five-year low last week,
has recouped some of those losses since the release of the
positive Canadian employment report last Friday. Still, analysts
expect the currency to remain around the C$1.13 level in the
near term.
    "You're getting a bit of consolidation. I think the markets
are still digesting the solid jobs report," said Bipan Rai,
director of foreign exchange strategy at CIBC World Markets, who
said the Canadian dollar could strengthen to C$1.1250 in the
short term.
    "We fully expect the market to sell the loonie on those dips
and still have that bias to buy U.S. dollar against it."
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3.5 Canadian
cents to yield 1.018 percent and the benchmark 10-year
 rising 1 Canadian cent to yield 2.058 percent.

 (Editing by Peter Galloway and James Dalgleish)