CANADA FX DEBT-C$ tracks crude rebound after hitting five-year lows

Tue Dec 9, 2014 9:53am EST
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* Canadian dollar at C$1.1449 or 87.34 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Dec 9 (Reuters) - The Canadian dollar strengthened
on Tuesday after touching its weakest level against the
greenback in more than five years, helped by a rebound in crude
prices after Monday's big sell-off.
    Oil, which sank about 4 percent in the previous session, set
new five-year lows on Tuesday before recovering, with some
buyers hopeful that prices, which have tanked more than 40
percent since June, are hitting bottom. 
    The Canadian dollar has been particularly sensitive to
movements in the price of oil due to the country's heavy
concentration of producers.
    "You're looking at a bit of a bounce from what was probably
an oversold day yesterday, both in oil as well as on the
currency," said David Tulk, chief Canada macro strategist with
TD Securities.
    "It's more generally a day where you're seeing a little bit
more reflection and unwinding of some of the big moves we've
seen previously."
    At 9:26 a.m. (1426 GMT), the Canadian dollar was at
C$1.1449 to the greenback, or 87.34 U.S. cents, stronger than
Monday's close of C$1.1482, or 87.09 U.S. cents, its weakest
close since July 13, 2009. 
    The currency briefly broke the key psychological C$1.15
level earlier in Tuesday's session.
    "Oil probably still has more downside in here," Tulk said,
adding that disappointing financial results from Canadian banks
and an economy that lags that of the United States would
probably also keep pressure on the Canadian dollar.
    Reasonably upbeat U.S. retail sales data on Thursday and a
slightly more hawkish Fed next week would give even more lift to
the U.S. dollar, Tulk said.
    Some cautious comments from two centrist Federal Reserve
policymakers on Monday put a slight damper on the U.S. dollar's
rally. San Francisco Fed President John Williams said the phrase
"considerable time" to describe the period that interest rates
will remain near zero was appropriate, while Atlanta Federal
Reserve Bank President Dennis Lockhart said he was not in a rush
to drop the words. 
    Other recent comments by senior Fed officials, however,
hinted that the central bank may soon drop this closely watched
    Canadian government bond prices were higher across the
maturity curve, with the two-year rising 3.5 Canadian
cents to yield 1.008 percent and the benchmark 10-year
 adding 13 Canadian cents to yield 1.879 percent.

 (Reporting by Solarina Ho; Editing by Lisa Von Ahn)