CANADA FX DEBT-C$ rallies on upbeat GDP, quarter-end settlements
(Recasts throughout; adds ForexLive quote, closing figures, positioning) * Canadian dollar at C$1.3345, or 74.93 U.S. cents * Bond prices mostly fall across the maturity curve By Solarina Ho TORONTO, Sept 30 (Reuters) - The Canadian dollar rallied against the greenback on Wednesday, bolstered in part by data showing faster-than-expected economic growth in Canada, and by month- and quarter-end settlements. The currency, which had softened to an 11-year intraday low of C$1.3457 in the previous session, rallied as much as C$1.3324. "The end-of-the-month and quarter-end is a time when it's extremely difficult to make sense of the day-to-day moves," said Adam Button, currency analyst at ForexLive, noting the loonie's moves relative to the price of crude, a key Canadian export. "The correlation was entirely backwards today. That just outlines the nature of flows ... Betting against the Canadian dollar has been great trade this quarter. Some of that is unwinding. At the same time, stock market sentiment is very strong today." The Canadian dollar ended at C$1.3345 to the U.S. dollar, or 74.93 U.S. cents, stronger than the Bank of Canada's official close of C$1.3418, or 74.53 U.S. cents on Tuesday. Button noted however, that October is typically a seasonally weak month for the Canadian dollar. And despite Wednesday's bounce, he and other strategists still see the currency softening further. "The view on Canada is just so negative right now, it's probably going to be tough for the Canadian dollar to gain meaningful traction," said BMO Capital Markets senior economist Benjamin Reitzes. The Canadian economy grew 0.3 percent in July, more than the 0.2 percent economists had been forecasting, in the second straight month of expansion after a dismal first five months of the year. "I think it's pretty encouraging that the Canadian economy has bounced back," said Reitzes. He noted, however, that a rebound in oil prices that drove a large part of the July increase was probably unsustainable. Investor attention will shift toward U.S. employment data for September, due at 8:30 a.m. EDT on Friday. Economists are forecasting 203,000 new jobs. A report by payrolls processor ADP showed U.S. private employers added 200,000 jobs this month, beating economists' expectations and reinforcing the possibility that the Federal Reserve could raise interest rates before the end of the year. Canadian government bond prices fell across the maturity curve, with the two-year down 2.5 Canadian cents to yield 0.521 percent and the benchmark 10-year falling 7 Canadian cents to yield 1.441 percent. The Canada-U.S. two-year bond spread narrowed to -11.6 basis points, while the 10-year spread narrowed to -60.3 basis points. (Reporting by Solarina Ho; Editing by Lisa Von Ahn and Chris Reese)
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