February 16, 2017 / 9:22 PM / 8 months ago

CANADA FX DEBT-C$ pulls back from 10-day high, $1.3000 out of reach

(Adds analyst quotes and details on TransCanada pipeline
application and updates prices)
    * Canadian dollar ends at C$1.3080, or 76.45 U.S. cents
    * Loonie touches its strongest since Feb. 6 at C$1.3010
    * Bond prices end higher across the yield curve

    By Fergal Smith
    TORONTO, Feb 16 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Thursday, pulling back from an
earlier 10-day high even as oil rose and the greenback lost
ground against a basket of major currencies.
    The loonie touched its highest since Feb. 6 at C$1.3010,
stalling just in front of the C$1.3000 threshold.
    "It has been a level of support (for the greenback) we have
seen for the last few weeks now," said Eric Theoret, currency
strategist at Scotiabank.         
    The U.S. dollar posted its steepest one-day drop in
over two weeks, due to lower U.S. bond yields and uncertainty
over the timing of the Federal Reserve's next interest rate
increase. 
    U.S. crude prices settled 25 cents higher at $53.36 a
barrel, helped by possible renewed efforts by major oil
producers to reduce a price-sapping glut. 
    Oil is one of Canada's major exports.
    The Canadian dollar ended at C$1.3080 to the
greenback, or 76.45 U.S. cents, slightly weaker than Wednesday's
close of C$1.3075, or 76.48 U.S. cents.
    "We are right back to the closing levels for the past two
days," said Theoret.
    Earlier gains for the loonie came one day after domestic
data showed a jump in manufacturing sales volumes that boded
well for fourth-quarter economic growth.
    On Monday, U.S. President Donald Trump said he only wants to
tweak trade ties with Canada, tempering investor concerns about
the county's trade outlook.
    Canada sends 75 percent of its exports to the United States,
but took a step on Wednesday toward reducing reliance on its
southern neighbor with the passage of the Comprehensive Economic
and Trade Agreement, a trade deal between Canada and the EU.
 
    TransCanada Corp, Canada's No. 2 pipeline operator,
filed an application with Nebraska authorities to route its
Keystone XL pipeline through the state, after Trump cleared the
way for the project last month. 
    If constructed, Keystone would provide oil producers in
Canada with a quicker route to send crude to U.S. Gulf Coast
refiners.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year 
rose 3.5 Canadian cents to yield 0.799 percent and the 10-year
 climbed 33 Canadian cents to yield 1.744 percent.
    On Wednesday, the 10-year yield touched a two-week high at
1.801 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli and
James Dalgleish)

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