January 22, 2020 / 2:35 PM / 6 months ago

CANADA FX DEBT-C$ strengthens ahead of Bank of Canada interest rate decision

    * Canadian dollar rises 0.2% against the greenback
    * Canada's annual inflation rate holds steady at 2.2% in
December 
    * Canadian wholesale trade falls 1.2% in November
    * Canadian bond prices dip across the yield curve

    TORONTO, Jan 22 (Reuters) - The Canadian dollar strengthened
against the greenback on Wednesday ahead of a Bank of Canada
interest rate decision, but some of the loonie's gains were
given up after domestic data showed inflation running close to
the central bank's target.
    Canada's annual inflation rate held steady at 2.2% in
December, Statistics Canada said, while the average of the Bank
of Canada's three measures of core inflation was 2.1%. The
central bank aims to keep inflation at 2%.             
    Separate data from Statistics Canada showed that wholesale
trade fell for the third time in five months in November,
declining 1.2%. Analysts had predicted wholesale trade would
hold steady.             
    The data could support a view that the domestic economy
slowed in the fourth quarter.
    The Bank of Canada is due to update its outlook for the
economy at 10 a.m. (1500 GMT), when it is expected to leave its
benchmark interest rate on hold at 1.75%.           
    At 9:15 a.m. (1415 GMT), the Canadian dollar          was
trading 0.2% higher at 1.3047 to the greenback, or 76.65 U.S.
cents. The currency traded in a range of 1.3036 to 1.3091.
    The gain for the loonie came as updates from China about the
spread of a new flu-like coronavirus raised hopes the outbreak
would be contained, boosting world stock markets         . 
            
    Canada is a major exporter of commodities, including oil, so
its economy could be hurt by a slowdown in the global economy.
    U.S. crude oil futures        were down 1.70% at $57.39 a
barrel as a market surplus forecast by the International Energy
Agency (IEA) outweighed concern over disruptions to Libya's
crude output.   
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 1.5 Canadian cents to
yield 1.630% and the 10-year             falling 12 Canadian
cents to yield 1.530%.  

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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