CANADA FX DEBT-C$ firms on weak U.S. data, oil bounce
(Adds quote, closing figures, details) * Canadian dollar at C$1.1945 or 83.72 U.S. cents * Bond prices higher across the maturity curve * 10-year bond yield falls to record low By Solarina Ho TORONTO, Jan 14 (Reuters) - The Canadian dollar strengthened marginally against its U.S. counterpart on Wednesday as crude prices ended a four-day retreat, while the greenback weakened on softer-than-expected U.S. retail sales data. Retail sales in the United States fell 0.9 percent in December as demand fell almost right across the board. It was the largest decline in 11 months. Crude prices, the biggest driver for the Canadian dollar in recent months, had their biggest daily percentage gain since the summer of 2012 as investors ignored oversupply worries and bought ahead of options expiration. Brent crude climbed 4.5 percent, while U.S. crude jumped 5.6 percent. As Canada is a major oil exporter, the loonie has moved in tandem with crude prices, which have plunged nearly 60 percent since June. Despite Wednesday's gains, oil prices remained near six-year lows. The Canadian dollar closed at C$1.1945 to the U.S. dollar, or 83.72 U.S. cents, modestly firmer than Tuesday's close of C$1.1954, or 83.65 U.S. cents. The loonie cracked the key C$1.20 level earlier in the session, its weakest since April 2009. "The fact that a lot of the fundamentals justify this trend lower in the Canadian dollar means that we will eventually get sustainably above (C$1.20)," said Greg Moore, senior currency strategist at Royal Bank of Canada. Traders were also anticipating the Bank of Canada's monetary policy report next week. They hope to hear further details from the bank on its view of the impact of cheap oil on the Canadian economy. "Everything signals that you'll have a relatively big divergence between monetary policy in Canada and the United States and that should further drive the Canadian dollar lower," said Charles St-Arnaud, a senior economist and strategist at Nomura Securities, adding the currency could hit C$1.25 by mid-2015. Canadian government bond prices were higher across the maturity curve, with the two-year up 5.5 Canadian cents to yield 0.889 percent and the benchmark 10-year jumping 23 Canadian cents to yield 1.575 percent. Yields on the 10-year bond dropped to a record low during the session. (Additional reporting by Alastair Sharp; Editing by Peter Galloway)
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