CANADA FX DEBT-C$ basks in data, oil, Greece relief rally
* C$ firms to C$0.9659 to the U.S. dollar, or $1.0353
* Bonds mostly higher across the curve
By Solarina Ho
TORONTO, June 30 (Reuters) - The Canadian dollar extended its gains against the U.S. dollar on Thursday to its highest in six weeks as the currency basked in a relief rally over economic data, higher oil prices and easing uncertainty over Greece's debt woes.
Canadian gross domestic product data had its second-worst monthly reading since September 2010, according to Statistics Canada. Strength in the mining sector buoyed the economy, however, offsetting a slump in auto manufacturing caused by supply disruptions stemming from the Japanese tsunami. For more see [ID:nN1E75T02E].
"We have the Canadian dollar materially stronger over the last few days. Almost everything is working in its favor," said Camilla Sutton, chief currency strategist at Scotia Capital, noting a general relief rally in markets.
"We had much-stronger-than-expected inflation data and now stronger-than-expected GDP data, so both will factor into expectations for the Bank of Canada, pulling forward the expectations of the market."
At 9:04 a.m. (1304 GMT), the currency CAD=D4 stood at C$0.9659 to the U.S. dollar, or $1.0353. This was up from Wednesday's North American finish at C$0.9706 to the U.S. dollar, or $1.0303. It hit a session high of C$0.9648, or $1.0365, its highest level since May 20.
Oil, a key Canadian export, also helped lift the commodity-sensitive currency, with crude prices firming following a report that showed U.S. jobless claims falling slightly in the previous week. [O/R]
On Wednesday, data showed that inflation in Canada rose to its highest since May 2003, raising the prospect the central bank could lift interest rates sooner than had been expected. [ID:nN1E75S02V]
Overseas, the euro climbed to a three-week high against the U.S. dollar EUR=, swept higher by month-end demand which helped it extend a rally after Greece moved a step closer to securing international aid. [FRX/]
"Markets are feeling quite relieved about (Greece). Having that uncertainty out of the way is an important milestone for the euro and currency markets," said Sutton, who expected the currency to trade between C$0.9610 and C$0.9710 on Thursday.
Manufacturing data out of China overnight will likely be one of the next drivers for the Canadian currency.
"Any upside surprise on that will be positive for the Canadian dollar," said Sutton.
Canadian bond prices were mostly higher across the curve.
The two-year bond CA2YT=RR was up 1.5 Canadian cents to yield 1.555 percent, while the 10-year bond CA10YT=RR rose 27 Canadian cents to yield 3.055 percent. (Editing by James Dalgleish)
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