February 16, 2016 / 2:51 PM / 2 years ago

C$ firms as oil prices, factory sales rise

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

TORONTO (Reuters) - The Canadian dollar on Tuesday hit a 12-day high against its U.S. counterpart, helped by gains in global oil prices on higher-than-expected factory sales

It pared gains as the rally in crude oil prices lost some momentum after Saudi Arabia and Russia agreed to freeze, but not cut, oil output.

U.S. crude CLc1 prices were up 0.68 percent to $29.64 a barrel.

Canadian factory sales rose by a higher-than-forecast 1.2 percent in December from November on gains for motor vehicles and wood products, data from Statistics Canada showed on Tuesday.

In other domestic data, sales of existing homes in Canada rebounded 0.5 percent in January from December as strong demand in Toronto and Vancouver offset declines in Calgary and Edmonton, a report from the Canadian Real Estate Association showed.

At 9:23 a.m. EST (1423 GMT), the Canadian dollar CAD=D4 was trading at C$1.3822 to the greenback, or 72.35 U.S. cents, stronger than Friday’s official close of C$1.3861, or 72.14 U.S. cents.

The currency touched its strongest since Feb 4. at C$1.3707, while its weakest level was C$1.3840.

Bearish bets by speculators against the Canadian dollar were trimmed slightly further after reaching five-month highs in January.

Net short Canadian dollar positions decreased to 51,935 contracts in the week ended Feb. 9 from 52,420 in the prior week, Commodity Futures Trading Commission data showed on Friday.

Canadian government bond prices were mixed across the maturity curve, with the two-year CA2YT=RR price down 0.5 Canadian cent to yield 0.439 percent and the benchmark 10-year CA10YT=RR rising 16 Canadian cents to yield 1.117 percent.

The 10-year yield touched a record low of 0.921 percent on Feb. 11 amid a flight to safety.

The Canada-U.S. 10-year spread was 3.3 basis points more negative at -64.4 basis points as recent outperformance by Treasuries was pared.

Reporting by Fergal Smith Editing by W Simon

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