July 20, 2017 / 9:06 PM / in 3 years

CANADA FX DEBT-C$ extends 14-month high, data eyed for next move

 (Adds analyst comment, updates prices)
    * Canadian dollar at C$1.2588, or 79.44 U.S. cents
    * Bond prices higher across the yield curve

    By Alastair Sharp
    TORONTO, July 20 (Reuters) - The Canadian dollar extended a
14-month high against its U.S. counterpart on Thursday as oil
prices rose and the greenback fell against a basket of major
currencies, with analysts looking to Friday's domestic data for
clues on the rally's next move.
    The loonie, as the currency is colloquially known, has
strengthened steadily since June, when the Bank of Canada took a
more hawkish turn, with the move getting fresh legs after the
central bank hiked interest rates last week.
    At the time, the central bank said it needed to look through
soft inflation data and would wait for more economic data before
committing to its next move, making June inflation and May
retail sales data due out on Friday key to the short-term trend.
    "The Canadian dollar is riding high, but it won't last
forever, and any signs of weakness in inflation and in consumer
spending could cause a sharp reversal," said Adam Button,
currency analyst at ForexLive in Montreal.
    At 4 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2588 to the greenback, or 79.44 U.S. cents, up
0.1 percent.
    The currency traded in a range of C$1.2541, its strongest
since early May 2016, and C$1.2640.
    Button said two strong prints on Friday could push the
currency to its strongest since mid-2015, while a negative
month-on-month inflation number could push it back up towards
    The U.S. dollar        gave up earlier gains after a
regional gauge of business conditions fell to an eight-month low
and as comments by European Central Bank President Mario Draghi
boosted the euro.             
    Prices for oil, a major Canadian export, settled lower in
choppy trading as nagging worries about abundant global crude
supplies sank prices after an early rally boosted Brent above
$50 per barrel for the first time since June 7.             
    Canadian government bond prices were higher across the yield
 curve, with the two-year            up 2.4 Canadian cents to
yield 1.242 percent and the 10-year             rising 14
Canadian cents to yield 1.882 percent.
    Last week, the 10-year yield touched its highest since
December 2014 at 1.948 percent.

 (Additional reporting by Fergal Smith; Editing by Meredith
Mazzilli and James Dalgleish)
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