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CANADA FX DEBT-C$ strengthens to a 2-week high on GDP data, oil

Published 2017-01-31, 09:33 a/m
© Reuters.  CANADA FX DEBT-C$ strengthens to a 2-week high on GDP data, oil
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* Canadian dollar at C$1.3036, or 76.71 U.S. cents

* Loonie touches its strongest since Jan. 17 at $1.3035

* Bond prices slightly higher across much of the yield curve

TORONTO, Jan 31 (Reuters) - The Canadian dollar strengthened to a two-week peak against its U.S. counterpart on Tuesday, supported by higher oil prices and domestic data that showed the economy expanded more than expected in November.

The Canadian economy grew 0.4 percent in November from October, pushed up in part by a rebound in manufacturing, Statistics Canada data indicated.

"The headline beat a little bit and the breadth was pretty decent ... on balance it was a pretty solid report," said Derek Holt, head of capital markets economics at Scotiabank.

The U.S. dollar .DXY was on course for its worst start to a year in more than a decade after a trade adviser to U.S. President Donald Trump added to signs the new administration may be trying to talk its currency down.

U.S. crude CLc1 prices were up 1.18 percent at $53.25 a barrel after news that OPEC oil production has fallen by more than 1 million bpd this month, pointing to a strong start by the exporter group in implementing its first supply cut deal in eight years.

Oil is one of Canada's major exports.

At 9:08AM ET (1408 GMT), the Canadian dollar CAD=D4 was trading at C$1.3036 to the greenback, or 76.71 U.S. cents, stronger than Monday's close of C$1.3120, or 76.22 U.S. cents.

The currency's weakest level of the session was C$1.3124, while it touched its strongest since Jan. 17 at $1.3035.

Bank of Canada Governor Stephen Poloz will give a speech on economic modeling and monetary policy. The central bank will release his prepared remarks at 17:20 p.m. ET (2220 GMT).

Earlier this month, Poloz said an interest rate cut remained "on the table" if the risks facing the country are realized, warning there would be "material consequences" if Trump enacts protectionist policies.

"I would expect him to repeat a fairly cautious, dovish message, keyed off of, in part, the trade policy uncertainty," Holt said.

Canadian government bond prices were slightly higher across much of the yield curve ahead of Poloz's speech and an interest rate decision from the U.S. Federal Reserve on Wednesday.

The two-year CA2YT=RR rose 1 Canadian cent to yield 0.791 percent and the 10-year CA10YT=RR gained 5 Canadian cents to yield 1.778 percent.

In other domestic data, producer prices rose by 0.4 percent in December from November, largely due to higher prices for energy and petroleum products.

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