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CANADA FX DEBT-Canadian dollar rebounds from one-week low as greenback falters

By Fergal Smith

(Adds dealer quotes and details throughout; updates prices) * Canadian dollar strengthens 0.2% against greenback * Canada's GDP unchanged in July * Loonie touches lowest level since Sept. 23 at 1.3290 * Canadian bond prices rise across steeper yield curve By Fergal Smith TORONTO, Oct 1 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday, recovering from an earlier one-week low after evidence the U.S.-China trade war was hurting U.S. manufacturing activity. At 3:46 p.m. (1946 GMT), the Canadian dollar was trading 0.2% higher at 1.3218 to the greenback, or 75.65 U.S. cents. Earlier in the session, the loonie hit its weakest intraday level since Sept. 23 at 1.3290, after data showed that the domestic economy had stalled in July. Canada's economy was unchanged in July, following four straight months of growth, as the country's mining, quarrying and oil and gas extraction sectors contracted, Statistics Canada data showed. Analysts had forecast an increase of 0.1%. "The minor disappointment in July GDP moved the currency ... but the big mover was the 10 o'clock manufacturing ISM number out of the U.S.," said Michael Goshko, corporate risk manager at Western Union Business Solutions. The U.S. dollar declined against a basket of major currencies after data showed the U.S. manufacturing sector contracted in September to its weakest level in more than a decade as business conditions worsened amid U.S.-China trade tensions. In contrast, Canadian manufacturing activity expanded in September at the fastest pace in seven months as new orders and production picked up, according to the IHS Markit Canada Manufacturing Purchasing Managers' index. "Our manufacturing number for September was a beat ... that would have added to the positive tone in Canada," Goshko said. The Bank of Canada has worried that the U.S.-China trade conflict is weighing more heavily on the global economy, but has showed no appetite for cutting rates amid steady domestic activity. . The price of oil, one of Canada's major exports, fell as weak U.S. economic data dimmed crude's demand outlook. U.S. crude oil futures settled 0.8% lower at %53.62 a barrel. Canadian government bond prices were higher across a steeper yield curve in sympathy with U.S. Treasuries. The two-year rose 8.5 Canadian cents to yield 1.533% and the 10-year was up 6 Canadian cents to yield 1.355%. (Reporting by Fergal Smith Editing by Paul Simao and Tom Brown)