November 30, 2016 / 2:45 PM / in a year

CANADA FX DEBT-C$ posts 3-week high as oil surges

* Canadian dollar at C$1.3405, or 74.60 U.S. cents
    * Loonie touches strongest since Nov. 9 at C$1.3357
    * Bond prices lower across a steeper yield curve

    By Fergal Smith
    TORONTO, Nov 30 (Reuters) - The Canadian dollar strengthened
against its firmer U.S. counterpart on Wednesday as oil prices
jumped on prospects of an OPEC output cut and data showed the
domestic economy grew in the third quarter at the fastest pace
in more than two years.
    Gross domestic product grew at an annualized 3.5 percent,
slightly exceeding economists' expectations of 3.4 percent and
picking up from a contraction of 1.3 percent in the second
quarter, data from Statistics Canada showed. 
    "The Canadian dollar was getting a nice lift in any event
from talk about an OPEC deal, that's the much bigger influence
today, but on balance this is basically pushing on an open door
and should provide some further support for the (Canadian)
dollar today," said Doug Porter, chief economist at BMO Capital
Markets.
    Monthly data showed the economy grew 0.3 percent in
September, which was also stronger than economists had expected.
    "The three-tenths (gain) is setting you up for solid growth
in the fourth quarter," said Paul Ferley, assistant chief
economist at Royal Bank of Canada.
    "It's going to reduce the prospect of any near-term easing
by the Bank of Canada."
    U.S. crude prices jumped more than 7 percent to
$48.54 a barrel as some of the world's largest oil producers
agreed to curb oil output for the first time since 2008. 
    At 9:24 a.m. EDT (1424 GMT), the Canadian dollar 
was trading at C$1.3405 to the greenback, or 74.60 U.S. cents,
stronger than Tuesday's close of C$1.3437, or 74.42 U.S. cents.
    The currency's weakest level of the session was C$1.3451,
while it touched its strongest since Nov. 9 at C$1.3357.
    Approval by Canada on Tuesday of Kinder Morgan Inc's 
hotly contested plan to build a pipeline from the Alberta oil
sands to the Pacific coast was seen by some market players as
also supportive of the Canadian dollar.
    The C$6.8 billion project would nearly triple capacity on
the artery to 890,000 barrels a day. 
    Canadian government bond prices fell sharply across a
steeper yield curve in sympathy with U.S. Treasuries. The
two-year bond fell 5 Canadian cents to yield 0.7
percent and the benchmark 10-year declined 73
Canadian cents to yield 1.593 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)

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