CANADA FX DEBT-C$ makes modest gains as oil extends rebound
* Canadian dollar at C$1.1619 or 86.07 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, Dec 18 (Reuters) - The Canadian dollar was firmer against the U.S. dollar on Thursday as market appetite for riskier assets returned and crude prices continued to rebound from 5-1/2 year lows. An upbeat assessment of the U.S. economy from the Federal Reserve on Wednesday and a signal that it would move to tighten policy as it has planned helped to buoy equity markets as well as commodities-linked currencies such as the Canadian dollar. "It's getting some strength from general risky assets doing better," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets, noting that stronger oil prices were also providing support. Crude prices rose as a number of oil companies moved to put plans for new production on hold and to cut spending. The loonie has been especially sensitive to plunging oil prices as Canada is a major oil exporter. At 9:30 a.m. EST (1430 GMT), the Canadian dollar was at C$1.1619 to the greenback, or 86.07 U.S. cents, stronger than Wednesday's close of C$1.1639, or 85.92 U.S. cents. Investor attention will shift on Friday to a slew of domestic economic data, including inflation and retail sales. "The test for Canada will be if we get soft data at the same time the U.S. data ... remains strong. Then it's going to put the divergence between the two central banks in a bit of a spotlight," Chandler said. The Bank of Canada has been more cautious about an economic rebound than the Fed and analysts say it seems highly unlikely it will hike interest rates until sometime after the Fed makes its first rate move. Canadian government bond prices were mixed across the maturity curve, but the longer term securities were generally weaker. The two-year bond gave back 3 Canadian cents to yield 1.015 percent, while the benchmark 10-year bond retreated 35 Canadian cents to yield 1.851 percent. (Editing by Peter Galloway)
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