CANADA FX DEBT-C$ at highest close in 3 weeks; oil outlook supports

Published 2016-09-06, 05:01 p/m
© Reuters.  CANADA FX DEBT-C$ at highest close in 3 weeks; oil outlook supports
USD/CAD
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CA2YT=RR
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CA10YT=RR
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* Canadian dollar at C$1.2915, or 77.43 U.S. cents

* Bond prices slightly higher across the maturity curve

By Alastair Sharp

TORONTO, Sept 6 (Reuters) - The Canadian dollar rose on Tuesday, notching its strongest close in almost three weeks against a broadly weaker U.S. dollar, as investors cheered stronger domestic data and signs that energy-producing countries may work together to tackle a supply glut.

The loonie has strengthened since data on Friday showed exports jumped 3.4 percent in July. Weaker U.S. data has dimmed expectations for a near-term rate hike from the Federal Reserve.

"The move that we've seen is an extension of Friday's move, which was a reflection of better trade numbers," said Mazen Issa, senior foreign exchange strategist at Toronto-Dominion Bank.

Tuesday's gain, after limited trading due to a public holiday in Canada and the United States on Monday, was bolstered by a sharp fall in U.S. service sector growth that hit the greenback. Canadian dollar CAD=D4 settled at C$1.2847 to the greenback, or 77.84 U.S. cents, stronger than Monday's close of C$1.2930, or 77.34 U.S. cents, according to Reuters data.

It was its strongest close since Aug. 17.

Its official close on Friday before the Labour Day holiday was C$1.2990, or 76.98 U.S. cents.

TD's Issa said that a growing recognition among energy-producing countries that low prices aren't helpful should also help the Canadian currency.

"There is a growing case for the Canadian dollar to remain resilient. A large part of that is a reflection of what could be a shifting commodity landscape in coming weeks," he said.

Oil had jumped on Monday after Saudi Arabia and Russia agreed to cooperate in world oil markets before paring some of those gains on Tuesday. O/R

OPEC members are due to hold informal talks later this month.

Canadian government bond prices were higher across the maturity curve, with the two-year CA2YT=RR bond up 4.5 Canadian cents to yield 0.569 percent and the benchmark 10-year CA10YT=RR adding 33 Canadian cents to yield 1.028 percent.

Earlier in the day, the 10-year yield reached its highest since Aug. 22 at 1.113 percent.

The Bank of Canada has a rate announcement scheduled for Wednesday. A Reuters poll showed markets see the central bank on hold until 2018. CA/POLL

Canada's August employment report is due on Friday. Investors will be looking to see whether the labor market can recover some of the 31,200 jobs it unexpectedly lost the month before. ECONCA

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