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Bonds News

CANADA FX DEBT-Canadian dollar advances on vaccine and U.S. stimulus hopes

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar rises 0.5% against the greenback
    * Canada's economy posts 40.5% annualized growth in 3rd
quarter
    * Canadian factory activity expands for fifth straight month
    * Canadian bond yields climb across a steeper curve

    By Fergal Smith
    TORONTO, Dec 1 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday as the potential for
U.S. economic stimulus and approval of a coronavirus vaccine
bolstered investor sentiment, while domestic data showed the
economy growing at a record pace.
    The loonie        was trading 0.5% higher at 1.2935 to the
greenback, or 77.31 U.S. cents, having traded in a range of
1.2930 to 1.3006. On Monday, it notched its strongest intraday
level in over two years at 1.2919.
    "The impact has been mostly around the vaccine," said Andrew
Cherry, head of global markets at HSBC Bank Canada. "It is also
the news that we could get some more stimulus out of the U.S.
Congress. That's what people are really focusing on right now."
    The safe-haven U.S. dollar        tumbled against a basket
of major currencies and Wall Street rallied as hopes that a
COVID-19 vaccine would be available soon and
better-than-expected factory data from China bolstered bets of a
speedy economic recovery.
    Also helping sentiment, a bipartisan group of U.S. lawmakers
unveiled a $908 billion COVID-19 relief bill.             
    Canada sends about 75% of its exports to the United States.
Canada's economy notched record annualized growth of 40.5% in
the third quarter, although analysts cautioned the rebound would
stagnate in coming months amid renewed COVID-19 restrictions.
            
    As Canada rolls out additional spending to support its
economy during a second wave of the coronavirus, bond investors
are giving Ottawa "the benefit of the doubt," expecting a
historic budget deficit to be slashed once the pandemic
subsides.              
    Separate data from IHS Markit showed that Canadian
manufacturing activity expanded for the fifth straight month in
November as output and new orders climbed.             
    Canadian government bond yields were higher across a steeper
curve in sympathy with U.S. Treasuries. The 10-year            
was up 6.1 basis points at 0.741%.   

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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