CANADA FX DEBT-C$ gains, hits 4-month high vs euro as oil recovers
(Adds strategist comment, updates prices to close) * Canadian dollar settles at C$1.3296, or 75.21 U.S cents * Bond prices mixed across the maturity curve By Alastair Sharp TORONTO, Nov 25 (Reuters) - The Canadian dollar made a small gain against its U.S. counterpart and pushed to a four-month high against the euro on Wednesday as crude oil recovered from earlier losses. The loonie, as Canada's currency is colloquially known, had weakened earlier as crude traded lower, before reversing course in line with the commodity, a major Canadian export. "We have been to a large extent tracking movements in crude oil," said Matt Perrier, managing director of foreign exchange sales at BMO Capital Markets. "It's been a fairly tight range all things considered, and not overly surprising given we're heading into the U.S. Thanksgiving holiday tomorrow," he said. The Canadian dollar settled at C$1.3296 to the greenback, or 75.21 U.S cents, slightly stronger than Tuesday's official close of C$1.3309, or 75.14 U.S. cents. U.S. crude prices settled up 0.4 percent at $43.04 a barrel, while Brent rose slightly to $46.17 after being driven higher on Tuesday by heightened geopolitical tensions. The Canadian dollar touched C$1.4067 to the euro, its strongest level against the single currency since mid-July, after Reuters reported that euro zone central bank officials were considering a range of options to kickstart the region's stagnant economy. Perrier said the loonie could strengthen further but will likely fade closer to the U.S. Federal Reserve's policy meeting in December, which many suspect will result in higher U.S. interest rates. "My view is largely predicated on a technical basis, and shorter term, given Monday's rejection of the topside and yesterday's higher close for the Canadian dollar, I see prospects for further Canadian dollar strength in the near term but I think it's going to be somewhat limited," he said. U.S. durable goods rose more than anticipated in October and jobless claims fell in the latest week, but that picture of economic improvement was offset by tepid consumer spending for October. Canada's economy is rebounding following a modest contraction in the first half of the year, boosted by non-energy exports and investment, which will help growth reach 2.5 percent in 2017, Bank of Canada Deputy Governor Lynn Patterson said on Tuesday. Canadian government bond prices were mixed across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 0.629 percent and the benchmark 10-year up 24 Canadian cents to yield 1.589 percent. Canada-U.S. spreads narrowed at the short end and widened further out, with the two-year bond spread at -30.5 basis points and the 10-year spread at -64.3 basis points. (Additional reporting by Fergal Smith; Editing by Nick Zieminski and Leslie Adler)
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