CANADA FX DEBT-C$ firms after U.S. data, bounces off five-year low

Wed Oct 15, 2014 5:19pm EDT
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* Canadian dollar at C$1.1258 or 88.83 U.S. cents
    * Loonie 5-year low before recovering
    * 10-yr bond yield at lowest since May 2013

 (Adds details, quote, updates prices)
    By Leah Schnurr
    TORONTO, Oct 15 (Reuters) - The Canadian dollar rose against
the greenback on Wednesday, bouncing off a more than five-year
low as it ran into technical resistance, though analysts still
expect the loonie could have further room to fall.
    Bond yields were also caught up in the global market rout,
with the yield on the benchmark 10-year Canadian government bond
 at its lowest since May 2013.
    Concerns about heavy oversupply sent U.S. crude 
sharply lower earlier in the day, which had weighed on the
loonie in morning trading. But the commodity came off its lows
and settled down just 6 cents at $81.78 a barrel, giving the
Canadian dollar some respite.
    As an oil exporter, Canada's currency is often sensitive to
the price of the commodity.
    The loonie fell as far as C$1.1385, its lowest level since
July 2009, before it backed off resistance around C$1.1380 to
C$1.1385, said Amo Sahota, director at Klarity FX in San
    "Technically, some targets for Canadian dollar bears have
been satisfied, but I don't necessarily think this means the end
of the U.S. dollar-Canadian dollar up move," Sahota said. "The
market could still be pushing in that direction."
    The Canadian dollar ended the North American
session at C$1.1258 to the greenback, or 88.83 U.S. cents,
stronger than Tuesday's close of C$1.1306, or 88.45 U.S. cents.
    The loonie also benefited as the greenback was hit by
disappointing U.S. retail sales and producer price figures.
    The U.S. dollar shed more than 1 percent against a
basket of currencies.
    The Canadian dollar has lost about 6 percent since July as
it has suffered from a rally in the U.S. dollar as the U.S.
Federal Reserve winds down its stimulus program and moves closer
to raising interest rates. Analysts expect that trend should
remain intact.
    "I wouldn't bet against it getting weaker," said Mark
Chandler, head of Canadian fixed income and currency strategy at
Royal Bank of Canada in Toronto.
    "We have C$1.15 at the end of the year and we're getting
there quick."
     Canadian government bond prices were higher across the
maturity curve, with the two-year up 14 Canadian
cents to yield 0.913 percent, its lowest level since June 2012.
     The benchmark 10-year was up 25 Canadian cents to yield
1.917 percent.

 (Editing by Diane Craft)