CANADA FX DEBT-C$ rises modestly, focus shifts to Friday's GDP
* Canadian dollar at C$1.0847 or 92.19 U.S. cents * 10-year bond yield at lowest since May 2013 (Adds details, quotes; updates prices) By Leah Schnurr TORONTO, Aug 28 (Reuters) - The Canadian dollar firmed modestly on Thursday, eking out a gain for the third day in a row on the back of technical momentum and investor repositioning, and as the market looked ahead to key domestic economic data at the end of the week. The loonie is up about 1 percent for the week so far, fueled by a sharp rise in Wednesday's session and putting it on track for its best week since late March. Analysts said there are a number of factors behind the currency's recent strength, including fund flow speculation stemming from Burger King's plans to buy Tim Hortons , stop loss levels that were triggered, and investor reallocation heading into the end of the month. Focus turned to Friday's gross domestic product report, with Canadian economic growth forecasted to pick up to 2.7 percent in the second quarter, bouncing back from a slowdown in the first three months of the year. Analysts say there is the potential for the figures to come in higher than expected, which would support the loonie. Even so, the loonie's recent strength is not expected to last. "This is the dip that most U.S. dollar bulls have been waiting for and, as such, we don't see this as the start of a new trend of strength in the loonie," said Bipan Rai, director of foreign exchange strategy at CIBC World Markets in Toronto. "It's the other way around, really, we expect this move to reverse as we head into September and markets begin looking toward the Federal Reserve tightening again." The Canadian dollar ended the North American session at C$1.0847 to the greenback, or 92.19 U.S. cents, slightly stronger than Wednesday's close of C$1.0855, or 92.12 U.S. cents. The loonie came off its high for the session at C$1.0837 shortly after U.S. data showed economic growth was revised higher for the second quarter, which supported the greenback. Earlier this week, the currency pairing tested and fell back from resistance around C$1.10, which initially sparked the move higher in the loonie. After the failure to break C$1.10, "a lot of people that were long U.S. dollars have probably gotten out of their positions," said Rahim Madhavji, president at KnightsbridgeFX.com in Toronto. Along with the fallout from the corporate takeover news, "that has brought things back to oscillating around C$1.09, which is the level we see things at going forward," he said. Canadian government bond yields were lower across the board, with the yield on the benchmark 10-year at its lowest level since May of last year at 1.997 percent. The two-year up half a Canadian cent in price to yield 1.101 percent. (Editing by Bernard Orr)
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