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CANADA FX DEBT-C$ firms against weaker U.S. dollar as oil prices rally
October 10, 2017 / 8:56 PM / in 8 days

CANADA FX DEBT-C$ firms against weaker U.S. dollar as oil prices rally

 (Updates throughout with closing price, analyst comments)
    * Canadian dollar at C$1.2511, or 79.93 U.S. cents
    * Loonie touches its strongest since Thursday
    * U.S. crude        prices climb 2.7 percent
    * Bond prices higher across the yield curve

    By Solarina Ho
    TORONTO, Oct 10 (Reuters) - The Canadian dollar strengthened
against a softer greenback on Tuesday as oil prices rallied,
while domestic housing data also provided support.
    Planned export cuts by Saudi Arabia and other signs of
market rebalancing drove oil prices higher, with U.S. crude
futures jumping 2.7 percent to settle at C$50.92 a barrel.
    The typically tight correlation between prices of oil, a
major Canadian export, and the loonie had broken down in recent
months as central bank monetary policy decisions steered
investor direction.
    "We find this reversal in the Canadian dollar a little bit
more commodities driven than rates driven," said Don Mikolich,
executive director, foreign exchange sales at CIBC Capital
Markets. "That has provided the momentum that has been absent
for a while."
    At 4:00 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2511 to the greenback, or 79.93 U.S. cents, up
0.3 percent.
    The loonie, which has weakened some 4 percent since early
September after the Bank of Canada dampened further rate hike
expectations and said it was monitoring the currency's
movements, traded between C$1.2484 and C$1.2555 on Tuesday.
    Canada's bond and stock markets were closed on Monday, the
Canadian Thanksgiving Day holiday.    
    Earlier in the session, separate data showed that Canadian
housing starts dipped in September, but did not fall as much as
expected, capping another quarter of strong home building
growth, though a drop in August building permits suggested the
long boom is cooling.             
    "I think the housing starts number this morning was
certainly a positive plug for the Canadian dollar. People had
been looking for some signs of softening," said Mikolich.
    Domestic data on Friday showed a pickup in wages and reduced
worries that the economy will slow in the second half of the
year.             
    Speculators have raised bullish bets on the loonie to the
highest since November 2012, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday.             
    Canadian government bond prices inched higher across the
yield curve, with the two-year            up half a Canadian
cent to yield 1.548 percent and the 10-year             up 6
Canadian cents to yield 2.12 percent.
    Canadian Prime Minister Justin Trudeau will meet President
Donald Trump on Wednesday. He will try to persuade the U.S.
leader to focus on Mexico as a source of potential problems at
talks to update the North American Free Trade
Agreement.            

 (Reporting by Solarina Ho and Fergal Smith; editing by Susan
Thomas and Grant McCool)
  
 

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