CANADA FX DEBT-C$ eases as U.S. data bolsters Fed expectations
* C$ at C$1.0530 vs US$, or 94.97 U.S. cents * U.S. Q2 GDP grows at 2.5 pct annual rate; job claims fall * Canada Q2 current account deficit widens to C$14.6 billion * Bond prices rise across maturity curve By Solarina Ho TORONTO, Aug 29 (Reuters) - The Canadian dollar softened against its U.S. counterpart on Thursday after data showed U.S. economic growth accelerated more quickly than expected during the second quarter. The greenback hit a two-week high as the latest data supported expectations the U.S. Federal Reserve could soon be ready to scale back its economic stimulus program, known as quantitative easing. U.S. gross domestic product grew at a 2.5 percent annual rate in the second quarter - more than double the pace of the previous three months - while the number of Americans filing new claims for unemployment benefits fell last week. "These numbers suggest the U.S. economy is doing not too badly at the moment. It doesn't need the emergency support that QE (quantitative easing) represents," said Shaun Osborne, chief currency strategist at TD Securities. "There's a fairly strong mandate here for the Fed to actually start to reduce asset purchases in September," he said, adding that Canadian data released on Thursday did not help the Canadian currency. Canada's current account gap widened to C$14.6 billion during the second quarter, in line with expectations, as exports struggled to gain traction and oil shipments to the United States fell. Meanwhile, producer prices rose for the second straight month in July. The Canadian dollar finished the session at C$1.0530 to the U.S. dollar, or 94.97 U.S. cents, weaker than Wednesday's North American finish of C$1.0485, or 95.37 U.S. cents. Osborne said trading was thin on Thursday due to late-summer holidays and noted that some stop-loss orders - placed to sell when a currency hits a certain price - were likely tripped when the currency pushed through the C$1.0510-to-C$1.0515 level. There is a good chance it could weaken into C$1.06 territory in the next week or two, he added. The commodities-linked Canadian dollar also lost some of the support it has been getting from oil prices, which retreated after a two-day surge. The delay of a Western military response to the reports of a chemical weapons attack on civilians in Syria helped calm worries over Middle East oil supplies. Canada's second-quarter economic growth figures and a slew of U.S. data on Friday will be the next drivers for the currency . "Everyone is expecting a weaker number, the question is how week," Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets, said of the Canadian growth report. Canadian government bond prices rose across the maturity curve. The two-year bond climbed 1 Canadian cent, yielding 1.194 percent, while the benchmark 10-year bond rose 15.5 Canadian cents, yielding 2.605 percent.
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