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TORONTO (Reuters) - The Canadian dollar edged higher against the U.S. currency on Thursday morning, lifted by firm commodity prices and U.S. economic data that soothed worries about economic recovery.
A report on Thursday showed the U.S. economy grew in the third quarter for the first time in more than a year as government stimulus helped lift consumer spending and home building, fueling an unexpectedly strong advance.
The currency, which rallied off a three-week low reached overnight, also benefited from firmer North American equity markets and a weaker greenback.
"The biggest mover today was the GDP release from the U.S.," said Camilla Sutton, currency strategist Scotia Capital. "It has investors back into risk-seeking mode."
The U.S. report helped to boost investor sentiment broadly and lifted the price of oil to around $79 a barrel, added Sutton, while gold prices were also higher.
"The impact toward currencies has been that the ones most weighted toward the global recovery -- so the commodity currencies -- are doing quite well," she said.
At 10:41 a.m. (1441 GMT), the Canadian unit was at C$1.0718 to the U.S. dollar, or 93.30 U.S. cents, up from C$1.0785 to the U.S. dollar, or 92.72 U.S. cents, at Wednesday's close.
The turnaround in the currency helped lift it off an overnight low of C$1.0822 to the U.S. dollar, or 92.40 U.S. cents, which marked its lowest level since October 5.
Investors were also awaiting monthly Canadian GDP data, due for release on Friday at 8:30 a.m. (1230 GMT). The numbers are expected to show the economy grew 0.1 percent in August after stagnating in July.
"The market is waiting for the GDP numbers and ahead of it we're seeing some risk appetite returning to the market," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
"But it's more a result of the sharp selloff that we've seen during the last few days rather than indicative of the market willing to turn around."
Domestic bond prices were down across the curve alongside a similar move in the bigger U.S. Treasury market, where debt prices fell on Thursday on the U.S. GDP report.
The two-year bond slipped 4 Canadian cents to C$99.58 to yield 1.458 percent, while the 10-year bond fell 23 Canadian cents to C$102.20 to yield 3.477 percent.
Additional reporting by Frank Pingue; editing by Rob Wilson