CANADA FX DEBT-Canadian dollar steadies near 12-week low as GDP data meets expectations

By Reuters News

By Fergal Smith

TORONTO, Sept 29 (Reuters) - The Canadian dollar steadied near a 12-week low against its US counterpart on Tuesday as the greenback posted broad-based gains and after Canadian GDP data pointed to economic resilience in the third quarter.

The loonie was trading nearly unchanged at 1.4175 per US dollar, or 70.55 US cents, after touching its weakest intraday level since July 8 at 1.4201. It left the currency on track to end a six-day losing streak which occurred as Canadian bond yields fell further below U.S. rates.

  • Canada's gross domestic product was unchanged in July compared to June, matching expectations, while a preliminary estimated showed GDP rising by 0.2% in August.

  • "The Canadian economy continues to hang in there despite the ongoing trade headwinds," Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets, said in a note. "This report puts Q3 GDP growth in line or slightly better than the BoC's forecast."

  • The Bank of Canada has forecast annualized growth of 1.5% in the third quarter.

  • A US import ban on many Canadian alcoholic beverages, motorcycles and dairy products took effect on Tuesday.

  • The U.S. dollar added to recent gains against a basket of major currencies but pulled back from its highest levels of the day.

  • Financial markets trimmed bets on a Federal Reserve interest-rate hike next month after New York Fed chief John Williams said he sees "no urgency" for further action after US central bank's policy rate increase earlier this month.

  • U.S. crude oil futures settled 3.5% lower at $89.38 a barrel as investors focused on signs of recovering crude exports from the Middle East. Oil is one of Canada's major exports.

  • Canadian government bond yields were mixed across a steeper curve.

  • The 2-year dipped about half a basis point to 3.374%, while the 10-year was up 3.2 basis points at 3.999%, trading near its highest level in three years, as the Bank of Canada said it's pushing back on the date when it might start purchasing government bonds.

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