CANADA FX DEBT-C$ closes slightly higher, briefly traded weaker than C$1.4000
(Adds analyst quotes, details; updates prices) * Canadian dollar at C$1.3945, or 71.71 U.S. cents * Bond prices higher across the maturity curve By Fergal Smith TORONTO, Dec 18 (Reuters) - The Canadian dollar managed a modest bounce against its U.S. counterpart after softer-than-expected domestic data had helped send the currency to a more than 11-year low, although the recovery was cut short by further weakening in oil prices. The loonie, as Canada's currency is colloquially known, traded weaker than C$1.4000 against the U.S. dollar for the first time since May 2004. But the move provided a signal for "profit taking," according to Adam Button, currency analyst at ForexLive. For the week, the Canadian dollar fell 1.5 percent, with losses deepening after the U.S. Federal Reserve hiked rates on Wednesday. The Bank of Canada will not be concerned by the softer-than-expected inflation data, but won't be able to look past the "collapse in commodities," Button said. "Oil is in a complete tailspin, he added, "and the Canadian dollar is right with it every step of the way." The Canadian dollar ended the week at C$1.3945 to the greenback, or 71.71 U.S. cents, slightly stronger than the Bank of Canada's official close on Thursday of C$1.3950, or 71.68 U.S. cents. The currency's strongest level of the session was C$1.3855, while its weakest level was C$1.4003. Canada's annual inflation rate rose to 1.4 percent, a touch shy of economists' forecasts for a rise to 1.5 percent. Closely watched core inflation, which strips out volatile items, dipped to 2.0 percent, which was also short of expectations. Wholesale trade dropped by 0.6 percent in October from September, the fourth consecutive monthly decline, and far short of analysts' average forecast for a 0.1 percent gain. U.S. crude prices settled at $34.73 a barrel, down 0.63 percent, while Brent crude lost 1.08 percent to $36.66. Canadian government bond prices were higher across the maturity curve, with the two-year price up 3.5 Canadian cents to yield 0.504 percent and the benchmark 10-year rising 29 Canadian cents to yield 1.398 percent. The Canada-U.S. two-year bond spread narrowed by slightly less than 3 basis points to -45.5 basis points, while the 10-year spread was 0.6 of a basis point narrower at -79.9 basis points, trimming recent outperformance for Canadian government bonds. (Reporting by Fergal Smith; Editing by Lisa Von Ahn and Leslie Adler)
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