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CANADA FX DEBT-C$ shrugs off solid GDP data; oil and Fed weigh

Published 2017-03-02, 09:17 a/m
© Reuters.  CANADA FX DEBT-C$ shrugs off solid GDP data; oil and Fed weigh
USD/CAD
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LCO
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CL
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CA2YT=RR
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CA10YT=RR
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* Canadian dollar at C$1.3380, or 74.74 U.S. cents

* Bond prices mixed across the maturity curve

TORONTO, March 2 (Reuters) - The Canadian dollar weakened against its U.S. counterpart in morning trade on Thursday, shrugging off solid domestic economic growth data as lower oil prices and increased bets on a U.S. interest rate hike weighed on the loonie.

The Canadian economy grew at a 2.6 percent annualized rate in the fourth quarter, Statistics Canada said, lifted by consumer spending and a rebound in activity in the housing market, while imports tumbled. polled by Reuters had expected 2 percent growth.

The currency briefly strengthened - moving from C$1.3385 to the greenback just before the data to C$1.3352 soon after - and then reverted to a weakening trend.

At 9:03 a.m. ET (1403 GMT), the Canadian dollar CAD=D4 was trading at C$1.3380 to the greenback, or 74.74 U.S. cents, weaker than Wednesday's close of C$1.3335, or 74.99 U.S. cents, which was the currency's weakest settlement since early January.

"For the Canadian dollar, we're not seeing a big response yet, but I think it's fairly clear that this is supportive news for the currency," said Doug Porter, chief economist at BMO Capital Markets.

The U.S. dollar has risen against a basket of currencies in the last two sessions as a string of U.S. Federal Reserve officials signal that rates may rise as soon as mid-March. loonie was also pressured by a decline in prices for oil, a major Canadian export.

U.S. crude CLc1 prices fell 1.5 percent to $53.02 a barrel, while Brent LCOc1 lost 1.40 percent to $55.57 after U.S. crude stocks hit an all-time high and official data showed Russia did not cut its oil production in February. O/R

Canadian government bond prices were mixed across the maturity curve, with the two-year CA2YT=RR flat to yield 0.762 percent and the benchmark 10-year CA10YT=RR up 3 Canadian cents to yield 1.684 percent. Prices for most other durations were lower.

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