CANADA FX DEBT-C$ firms on stronger-than-expected economic growth data


* Canadian dollar at C$1.1088 or 90.19 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, Feb 28 (Reuters) - The Canadian dollar firmed against the greenback on Friday after data showed the domestic economy grew at a faster pace than had been expected in the final months of last year.

Canada's economy expanded at a 2.9 percent annualized rate in the fourth quarter, surpassing the 2.5 percent economists has forecast. Growth for the first two quarters of 2013 was also revised higher.

"All told, a pretty decent quarter, which is a bit ahead of what the Bank of Canada had forecast," said David Tulk, chief Canada macro strategist at TD Securities in Toronto.

After some choppy initial reaction immediately after the report, the Canadian dollar firmed to a session high. Investors were also taking in data south of the border that showed U.S. growth in the fourth quarter was revised lower.

The Canadian dollar was at C$1.1088 to the greenback, or 90.19 U.S. cents, stronger than Thursday's close of C$1.1136, or 89.80 U.S. cents.

The loonie firmed in the first three weeks of February, but the currency dropped sharply last week after disappointing wholesale trade data and it has been drifting largely sideways since. Still, the Canadian dollar is not far from the 4-1/2-year low of C$1.1225 hit at the end of January.

"I think this consolidation phase that we've been in since the beginning of February is probably something that won't go away any time soon. We're still likely to see a bit more sideways price action and even lower levels in U.S. dollar-Canadian dollar, in my mind," said Greg Moore, senior currency strategist at Royal Bank of Canada in Toronto.

The Bank of Canada meets next week and, with the central bank expected to hold rates at 1 percent, investors will be watching the accompanying statement closely for any changes in language.

"Given the fact that there's not really much ahead of the Bank of Canada meeting next week and expectations heading into that are fairly neutral - that they're not going to be able to change their message - suggests we're not going to get much new to drive the Canadian dollar lower," said Moore.

Canadian government bond prices were lower across the maturity curve, with the two-year off 3 Canadian cents to yield 1.007 percent and the benchmark 10-year down 27 Canadian cents to yield 2.444 percent.

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