CANADA FX DEBT-C$ at six-week low after strong U.S. GDP data

Wed Jul 30, 2014 9:28am EDT

* Canadian dollar at C$1.0887 or 91.85 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, July 30 (Reuters) - The Canadian dollar weakened to
a six-week low against the greenback on Wednesday after data
showed a bigger-than-expected pick up in growth south of the
border, boosting the U.S. dollar to the detriment of the loonie.
    U.S. gross domestic product expanded at a 4 percent annual
rate in the second quarter, recovering from a decline in the
first three months of the year. 
    "It conforms to the overall trend in the U.S. dollar that we
have been seeing in recent days. There is support for the
greenback against the major crosses," said Martin Schwerdtfeger,
FX strategist at TD Securities in Toronto. 
    "The stronger-than-expected GDP number was the catalyst that
was needed to cement those moves higher for the U.S. dollar, and
the loonie was no exception."
    A separate report released at the same time showed
industrial product prices in Canada edged down in June, but the
report was largely eclipsed by the U.S. data. 
    The Canadian dollar was at C$1.0887 to the
greenback, or 91.85 U.S. cents, weaker than Tuesday's close of
C$1.0859, or 92.09 U.S. cents.
    The loonie has lost more than 1 percent in the last four
sessions that have been punctuated by two significant selloffs.
The declines have pushed the currency through key technical
levels and out of the tight range it traded in for half of July.
    Schwerdtfeger expects the next leg lower will take the
Canadian dollar into the mid-C$1.09 area and it could decline
further to C$1.10 in coming months if U.S. economic data remain
strong.
    Still on tap later in the day is a policy statement from the
U.S. Federal Reserve at the conclusion of its two-day meeting.
The central bank is expected to continue winding down its
bond-buying and investors will be looking for any insight on
when the Fed could eventually raise rates. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 2-1/2 Canadian
cents to yield 1.094 percent. The benchmark 10-year 
was down 25 Canadian cents to yield 2.120 percent, coming off
the previous day's lowest level in over a year for yields.

 (Reporting by Leah Schnurr; Editing by Nick Zieminski)
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