June 28, 2019 / 4:20 PM / 3 months ago

CANADA FX DEBT-C$ notches 8-month high as data seen keeping BoC on sidelines

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Canada's economy grows by 0.3% in April
    * Loonie climbs 3.3% in June
    * Canadian bond prices were mixed across the yield curve

    By Fergal Smith
    TORONTO, June 28 (Reuters) - The Canadian dollar
strengthened to a near eight-month high against the greenback on
Friday after domestic data supported the view that the Bank of
Canada will not be cutting interest rates over the coming
months.
    Canada's economy grew by 0.3% in April, Statistics Canada
data indicated, faster than the 0.1% pace that analysts had
predicted, while a business outlook survey by the Bank of Canada
showed that Canadian firms expect an increase in sales growth
over the coming year.                         
    "The Canadian economy is suddenly an outperformer in a world
dominated by uncertainty," said Adam Button, chief currency
analyst at ForexLive. "The data underscores that the Bank of
Canada will not be cutting rates any time soon."
    Chances of an interest rate cut by the Bank of Canada this
year fell to about 30% from more than 40% before the data, the
overnight index swaps market indicated.           
    Money markets expect at least two rate cuts from the U.S.
Federal Reserve over the same period.           
    At 11:55 a.m. (1555 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3087 to the greenback, or 76.41 U.S.
cents. The currency touched its strongest level since Nov. 7
last year at 1.3060.
    For the month, the loonie was up 3.3%.
    The price of oil, one of Canada's major exports, edged lower
ahead of talks over the trade dispute between the U.S. and
Chinese presidents this weekend and on production cuts from OPEC
on Monday. U.S. crude oil futures        were down 0.1% at
$59.38 a barrel.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            down 3 Canadian cents to
yield 1.471% and the 10-year             rising 3 Canadian cents
to yield 1.471%.
    On Thursday, the 10-year yield touched its highest intraday
in more than two weeks at 1.522%.
    The Canadian bond market was due to close early ahead of the
Canada Day holiday on Monday.    

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Susan Thomas)
  
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