CANADA FX DEBT-C$ stronger, but oil prices, OPEC uncertainty weigh

Tue Nov 25, 2014 4:52pm EST
 
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(Adds new market comment, details and closing figures)
    * Canadian dollar ends at $1.1253 or 88.87 U.S. cents
    * Bond prices higher across the curve

    By Solarina Ho
    TORONTO, Nov 25 (Reuters) - The commodities-linked Canadian
dollar firmed moderately against its U.S. counterpart on
Tuesday, helped in part by stronger-than-expected Canadian
retail sales growth, but gains were tempered by tumbling crude
prices ahead of a closely-watched OPEC meeting.
    Oil prices, which have declined 30 percent since June, fell
to near four-year lows in volatile trading after a meeting
between Saudi Arabia and three other nations ended with no deal
to curb crude output. That left investors uncertain about the
likely outcome of Thursday's OPEC summit that will decide
production levels for next year. 
    "I think we reacted finally a little bit to the slide in the
oil prices this afternoon, so we bounced ... back to these
middling levels," said Matt Perrier, managing director of
foreign exchange sales of BMO Capital Markets.
    "With crude still trading heavy, looking like it is, the
Canadian dollar should probably weaken off a little bit
further."
    The Canadian dollar finished Tuesday's session at
C$1.1253 to the greenback, or 88.87 U.S. cents, stronger than
Monday's close of C$1.1289, or 88.58 U.S. cents.
    In Canada, a surge in the auto sector helped retail sales
power ahead by 0.8 percent in September. Statistics Canada has
already reported strong manufacturing, wholesale, export and
building permits data for September, and retail sales was the
last key piece of economic data ahead of Friday's gross domestic
product growth figures. 
    Martin Schwerdtfeger, a currency strategist at TD
Securities, said the Canadian dollar was unlikely to make a big
move ahead of the OPEC meeting and Friday's GDP data for the
third quarter.
    "Those are going to be the key events. But we have to keep
in mind that is going to be happening in an environment with
less liquidity because of the U.S. (Thanksgiving) holiday," said
Schwerdtfeger, noting that it will heighten the risk of more
volatility.
    Canadian government bond prices were higher across the
maturity curve, with the two-year climbing 5.2
Canadian cents, to yield 1.034 percent and the benchmark 10-year
 rising 30 Canadian cents to yield 1.947 percent.

 (Reporting by Solarina Ho; Editing by Jonathan Oatis and Tom
Brown)