January 4, 2018 / 9:50 PM / 12 days ago

CANADA FX DEBT-C$ extends 2-1/2-month high as oil prices rise

 (Adds strategist quotes and details on market activity, updates
prices)
    * Canadian dollar at C$1.2497, or 80.02 U.S. cents
    * Loonie touches its strongest since Oct. 20 at C$1.2490
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Jan 4 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday, extending a
2-1/2-month high, as the greenback fell broadly and oil prices
rose, while investors awaited U.S. and Canadian jobs data on
Friday.
    A report showing that the U.S. economy created more
private-sector jobs than expected last month lent some support
to the U.S. dollar       . But the greenback was still lower
against a basket of major currencies.             
    "The U.S. dollar is looking a bit pale because of the better
indicators out of Europe," said Mark Chandler, head of Canadian
fixed income and currency strategy at RBC Capital Markets.
    The rally in oil also supported the loonie, Chandler said.
    The price of oil, one of Canada's major exports, rose to its
highest point since May 2015, on concern about supply risks
because of unrest in Iran and another decline in U.S.
inventories as refining activity hit a 12-year high.
            
    U.S. crude futures        settled 0.6 percent higher at
$62.01 a barrel.
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading at C$1.2497 to the greenback, or 80.02 U.S. cents, up
0.3 percent.
    The currency, which has benefited from firm domestic data
the past month, touched its strongest level since Oct. 20 at
C$1.2490.
    Canada's employment report for December and November trade
data are due on Friday, which could help guide expectations for
Bank of Canada interest rate hikes in 2018.
    The central bank raised its benchmark interest rate for the
first time in seven years in July and then again in September,
putting it at 1 percent. Money markets expect three further rate
hikes this year.            
    In domestic data, producer prices rose by 1.4 percent in
November from October, on higher prices for energy and petroleum
products, Statistics Canada said.             
    Home sales in Toronto, Canada's largest city, fell 18.3
percent in 2017 from the previous year's record as provincial
government measures to cool the housing market weighed on
demand.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 3 Canadian cents to yield 1.70 percent and the 10-year
            declined 26 Canadian cents to yield 2.083 percent.
    On Tuesday, the 10-year yield touched its highest level in
more than two months at 2.093 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli and
Peter Cooney)
  

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