4 Min Read
* C$ rises to 98.62 U.S. cents
* Bond prices lower across curve
* Oil hits 2-year high, stocks positive
* US Q3 GDP revised up, previously owned home sales rise
(Updates to afternoon, adds U.S. data, quotes)
By Claire Sibonney
TORONTO, Dec 22 (Reuters) - Canada's dollar rose against the greenback on Wednesday, rebounding from a recent slide as the price of oil hit a two-year high and stronger U.S. data signaled the economy was ending the year on solid ground.
Oil, a key Canadian export, rose after news of a drop in U.S. inventories and cold weather on both sides of the Atlantic. [O/R]
Also benefiting Canada's risk-related currency, sales of previously owned U.S. homes rose in November and third-quarter gross domestic product was revised up, higher than expected. [ID:nN22291718] The stronger U.S. data encouraged risk takers, a trend that supported stock prices as well as the Canadian dollar.
"If you look at the global macro environment, it's generally better sentiment," said Sacha Tihyani, currency strategist at Scotia Capital.
"It's a bit of a reversal of underperformance over the past couple days, more support of equity prices, surer support of oil, and the fact that the U.S. numbers didn't disappoint."
At 2:40 p.m. (1940 GMT), the Canadian currency CAD=D4 was at C$1.0140 to the U.S. dollar, or 98.62 U.S. cents, up from C$1.0175 to the U.S. dollar, or 98.28 U.S. cents, at Tuesday's close.
The Canadian dollar was among the day's outperforming major currencies, on track to end four straight sessions of losses against the greenback.
Tihanyi said the near-term trading range should hold between C$1.01 to C$1.0210.
"We had a couple days of weakness in the Canadian dollar, and there is a threshold through which the market wasn't willing to bring it past, and I think that was probably seen as a good value level to buy Canadian dollars in the near term," he said.
However, the Canadian dollar's moves are still expected to be restrained. "In the big scheme of things, the Canadian dollar remains in a pretty good uptrend. Canada's going to grind higher but there won't be enough gas to push through par before year end," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange.
Scotia's Tihanyi said given the seasonal light volumes, the currency's direction may be driven more by flows -- even relatively small orders -- than anything else, and recent year-end trends have favored the U.S. dollar over Canada's.
Traders will now turn their attention to Canada's gross domestic product figures for October, due Thursday. It's the last major piece of data before the Christmas and New Year holidays. [ECONCA]
With risk-taking back on, Canadian bond prices fell, tracking U.S. Treasuries after the Federal Reserve completed its last purchases until next week, and ahead of new supply. [US/] The two-year bond CA2YT=RR was down 6 Canadian cents to yield 1.662 percent, while the 10-year bond CA10YT=RR slid 33 Canadian cents to yield 3.182 percent.
(Reporting by Claire Sibonney; Editing by Frank McGurty)