CANADA FX DEBT-C$ gains further after trade surplus surprise
* C$ touches high of C$1.0479 to the U.S. dollar
* Canadian bonds prices lower, but outperform Treasuries (Updates to include trade data, adds quote)
By Jennifer Kwan
TORONTO, Dec 10 (Reuters) - The Canadian dollar extended gains against the U.S. currency on Thursday after domestic data showed a surprise trade surplus in October after three months of deficits.
The Canadian dollar touched a session high of C$1.0479, or 95.43 U.S. cents, following the trade data, up from around C$1.0500, or 95.24 U.S. cents before the report.
Canada unexpectedly posted a surplus as exports to the United States picked up steam while imports fell, Statistics Canada said on Thursday. [ID:nN10154628]
"The Canadian dollar was already strengthening ahead of the data as we saw risk appetite returning to the market," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
"Then we had the surprisingly good data. A small upside surprise but I think more importantly it flipped from a deficit to a surplus again and that caught the attention of the market and we saw some further Canadian buying on the back of that."
Also, the U.S. dollar fell against the euro and pared gains against the yen on Thursday after a narrower-than-expected U.S. trade deficit for October and better continuing jobless claims, reducing safe-haven demand for the greenback. [FRX/] [ID:nN09169993]
At 8:53 a.m. (1353 GMT), the Canadian dollar CAD=D3 was at C$1.0494 to the U.S. dollar, or 95.29 U.S. cents, up from Wednesday's finish at C$1.0545 to the U.S. dollar, or 94.83 U.S. cents.
Oil, a key Canadian export, rose to about $71 a barrel after falling more than 2 percent in the previous session, supported by a limp dollar and rising equities [O/R] [MKTS/GLOB].
"It's a risk-on day," said Steve Butler, director of foreign exchange trading at Scotia Capital. "We probably have been a little oversold."
Canadian bond prices followed U.S. Treasuries lower on supply concerns after a weak 10-year U.S. debt auction in the previous session and as investors braced for more longer-dated U.S. supply on Thursday.
But Canadian government bonds outperformed U.S. issues, with the Canadian 10-year yield 12.9 basis points below its U.S. counterpart, compared with 11.7 basis points the previous session. (Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)
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