December 28, 2016 / 9:57 PM / 7 months ago

CANADA FX DEBT-Year-end flows drive C$, oil remains firm

2 Min Read

* Canadian dollar at C$1.3555 or 73.77 U.S. cents
    * Bond prices mostly higher across the maturity curve

    By Solarina Ho
    TORONTO, Dec 28 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart in quiet holiday trading on
Wednesday, but not before touching its weakest level in 10
months earlier in the session.
    The Canadian dollar's moves were mostly driven by flows,
however, as the year winds to a close and with many Canadian
participants off during a holiday-shortened work week.
    "Anytime the market touches a new (USD/CAD) high in a such a
quiet market, it's suspicious," said Adam Button, currency
analyst at ForexLive in Montreal. "It's flows, it's settling of
accounts."    
    The Canadian dollar closed at C$1.3555, or 73.77
U.S. cents, marginally firmer than Tuesday's close of C$1.3577,
according to Thomson Reuters data.
    It was weaker, however, compared with the Bank of Canada's
last official close of C$1.3535, or 73.88 U.S. cents on December
23.
    The currency's strongest level of the session was C$1.3539.
It touched its weakest level since Feb. 25 against the
greenback, trading at C$1.3598 early in the North American
session. The U.S. dollar firmed on continued expectations the
Federal Reserve will raise interest rates next year to keep step
with inflation and growth. 
    The price of oil, a key Canadian export, held near levels
not seen since mid-2015. Prices have gained some 25 percent
since mid-November, helped in part by expectations for OPEC's
supply cut. 
    Canadian government bond prices were mostly across the
maturity curve, with the two-year price up 3.5
Canadian cents to yield 0.777 percent and the benchmark 10-year
 rising 56 Canadian cents to yield 1.731 percent.

 (Reporting by Solarina Ho; Editing by Marguerita Choy)

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