Markets News

CANADA FX DEBT-Loonie trades sideways as investors await clues on rate outlook

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar trades near flat against the greenback
    * Canada adds 46,200 jobs in December
    * Loonie trades in a range of 1.3033 to 1.3056
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Jan 16 (Reuters) - The Canadian dollar was little
changed against the greenback on Thursday, extending this week's
sideways trading pattern as investors awaited economic data over
the coming weeks that could shape expectations for the Bank of
Canada interest rate outlook.
    At 3:48 p.m. (2048 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3042 to the greenback, or 76.68
U.S. cents. The currency, which has moved in a narrow range
since hitting a near two-week low last Thursday at 1.3104,
traded between 1.3033 and 1.3056.
    "We think over the next couple of weeks we'll definitely be
getting a better read on how (Canadian) Q4 GDP shaped up," said
Mazen Issa, senior FX strategist at TD Securities. "Currently
our tracking for GDP is pretty abysmal ... tracking at about a
0.5% increase."
    November data for manufacturing, wholesale trade and retail
sales is due next week, while the Bank of Canada will make an
interest rate decision and update its outlook for the economy.
    In October, the central bank projected a 1.3% annualized
increase for fourth-quarter gross domestic product.
    "The market is still under-appreciating what the BoC
response could be" if economic data disappoints, Issa said. 
    Money markets see chances of a rate cut by April at less
than 20%.           
    Data on Thursday from payroll services provider ADP showed
that Canada's economy added 46,200 jobs in December, the sixth
straight month of gains.                               
    The U.S. Senate approved a revamp of the 26-year-old North
American Free Trade Agreement that includes tougher rules on
labor and automotive content but leaves $1.2 trillion in annual
U.S.-Mexico-Canada trade flows largely unchanged.
    Canada sends about 75% of its exports to the United States,
including oil.
    U.S. crude oil futures        settled 1.2% higher at $58.52
a barrel as progress on another major trade deal following the
Phase 1 U.S.-China accord fed optimism that energy demand will
grow in 2020.                             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 2.5 Canadian cents to yield 1.650% and the
10-year             was down 19 Canadian cents to yield 1.556%.

 (Reporting by Fergal Smith; Editing by David Gregorio and Peter