November 24, 2015 / 2:52 PM / 3 years ago

Canadian dollar rises as oil rallies on Middle East tensions

TORONTO (Reuters) - The Canadian dollar firmed against the U.S. dollar on Tuesday, helped by the rally in crude oil on raised geopolitical tensions, while the U.S. gross domestic product was revised higher for the third quarter, in line with expectations.

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

Turkey shot down a Russian warplane near the Syrian border, helping to drive crude oil prices and safe-haven assets higher.

U.S. crude CLc1 prices were up 3.26 percent to $43.11 a barrel, while Brent crude LCOc1 added 3.06 percent to $46.2.

The U.S. economy grew at a healthier clip in the third quarter than initially thought, suggesting resilience that could give the Federal Reserve confidence to raise interest rates next month, although efforts by businesses to reduce an inventory bloat had not been as aggressive as previously believed.

At 9:23 a.m. EST (1423 GMT), the Canadian dollar CAD=D4 was trading at C$1.3339 to the greenback, or 74.97 U.S. cents, firmer than the Bank of Canada’s official close of C$1.3373, or 74.78 U.S. cents.

The currency hit a seven-week low on Monday at 1.3436, having moved back in sight of the 11-year low hit in September at 1.3457.

Canadian government bond prices were mixed across the maturity curve, with the two-year CA2YT=RR price up 1.5 Canadian cents to yield 0.615 percent and the benchmark 10-year CA10YT=RR falling 4 Canadian cents to yield 1.616 percent.

* The Canada-U.S. two-year bond spread narrowed 1.5 basis points to -30.8 basis points, while the 10-year spread was 1.3 basis points narrower at -62.5 basis points, as Treasuries outperformed on the flight to quality.

The domestic data calendar is empty.

Bank of Canada Deputy Governor Lynn Patterson will give a presentation on the topic “Promoting Canada’s Economic and Financial Well-Being” at 5:35 p.m. EST (2235 GMT), the last scheduled appearance by a policymaker before the central bank’s next interest rate decision due Dec. 2.

Reporting by Fergal Smith; Editing by Nick Zieminski

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