CANADA FX DEBT-C$ at more than 7-week low, eyes worst month since Jan
* Canadian dollar at C$1.0916 or 91.61 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, July 31 (Reuters) - The Canadian dollar hit a more than seven-week low against the greenback on Thursday as the loonie suffered from a continuing wave of support for the U.S. dollar despite data that showed the Canadian economy grew at a faster pace than expected in May. It was the fourth session in the past five the Canadian dollar has weakened, making for a 1.5 percent decline since last Friday. Increasing optimism that U.S. economic recovery is picking up steam has prompted investors to dump the loonie in favor of the greenback. Its drop through a series of key resistance points has added to the downward momentum. The stronger-than-expected Canadian data on Thursday did nothing to change the trend. The economy grew by 0.4 percent in May. That was the fifth monthly increase in a row and topped expectations for 0.3 percent growth. The loonie briefly touched a session low after the data was released, however, while at the same time the market was taking in a report that showed the number of Americans filing new claims for unemployment benefits rose last week. That report didn't dampen optimism that the U.S. labor market is strengthening. Another report suggested U.S. wage growth acceleration is on the way due to labor cost increases in the second quarter. "That's broadly constructive for the U.S. dollar and Canada gets caught in the crossfire," said David Tulk, chief Canada macro strategist at TD Securities in Toronto. "We're left with a broader theme of higher U.S. dollar-Canadian dollar and we've gone through some technical levels, momentum is building as well." The Canadian dollar was at C$1.0916 to the greenback, or 91.61 U.S. cents, weaker than Wednesday's close of C$1.0901, or 91.73 U.S. cents. The loonie is down 2.3 percent for July, which is on track to be its worst month since January, when the currency suffered a steep selloff. The C$1.0930 level will be one to watch during the session, but stronger conviction could get the loonie to C$1.0950, Tulk said. Beyond that, investors will be watching for C$1.10, he added. Canadian government bond prices were lower across the maturity curve, with the two-year down 3 Canadian cents to yield 1.122 percent and the benchmark 10-year down 24 Canadian cents to yield 2.190 percent. (Reporting by Leah Schnurr; Editing by Peter Galloway)
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