CANADA FX DEBT-C$ strengthens to 3-week high as oil rallies
(Adds analyst comments, updates prices) * Canadian dollar settles at C$1.2980, or 77.04 U.S. cents * Loonie touches its strongest since July 19 at C$1.2958 * Bond prices lower across the maturity curve By Fergal Smith TORONTO, Aug 11 (Reuters) - The commodity-linked Canadian dollar strengthened to a three-week high against its U.S. counterpart on Thursday, as oil and stocks rallied. Oil rose after comments from the Saudi oil minister about possible action to stabilize prices triggered a round of buying and the International Energy Agency forecast crude markets would tighten in the second half of 2016. Other commodity-linked currencies also advanced, including the Kiwi dollar after a smaller-than-expected quarter-point cut from the Reserve Bank of New Zealand. Adding to support for the risk-sensitive Canadian dollar, shares on Wall Street advanced, with all three major indices closing at record highs as strong results from department store chains and a surge in oil prices buoyed investor sentiment. The U.S. dollar rose against a basket of major currencies. However, that followed two days of losses. Weak U.S. productivity data this week has undermined confidence that the U.S. economy will be able to deliver on strong growth, said Michael Goshko, a corporate risk manager at Western Union Business Solutions. "It shoots (U.S.) rate expectations in the heart," he added. The Canadian dollar ended at C$1.2980 to the greenback, or 77.04 U.S. cents, stronger than Wednesday's close of C$1.3064, or 76.55 U.S. cents. The currency's weakest level of the session was C$1.3080, while it touched its strongest since July 19 at C$1.2958. Some investors that were short Canadian dollars covered those positions when C$1.3000 was breached, said Goshko. New home prices in Canada rose 0.1 percent in June from the previous month, following a 0.7 percent monthly increase in May, Statistics Canada said. On a year-over-year basis the index increased 2.5 percent. Canadian government bond prices were lower across the maturity curve in sympathy with U.S. Treasuries. The two-year bond fell 6 Canadian cents to yield 0.538 percent and the benchmark 10-year declined 38 Canadian cents to yield 1.032 percent. On Wednesday, the 10-year yield had fallen below the 1 percent threshold for the first time in nearly four weeks. (Reporting by Fergal Smith; Editing by Bernadette Baum and Diane Craft)
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