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CANADA FX DEBT-C$ holds on to recent gains ahead of Bank of Canada, OPEC decisions

Published 2017-05-24, 09:47 a/m
Updated 2017-05-24, 09:50 a/m
© Reuters.  CANADA FX DEBT-C$ holds on to recent gains ahead of Bank of Canada, OPEC decisions

* Canadian dollar at C$1.3512, or 74.01 U.S cents

* Bond prices higher across the yield curve

TORONTO, May 24 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Wednesday, holding onto recent gains ahead of an interest rate decision by the Bank of Canada and a possible extension of oil production cuts by major producers.

U.S. crude's CLc1 price dipped 0.19 percent to $51.37 a barrel as investors waited for news from Vienna, where ministers from the Organization of the Petroleum Exporting Countries and other nations were discussing whether to extend production cuts into the first quarter of 2018. is one of Canada's major exports.

The Bank of Canada is widely expected to hold interest rates at 0.50 percent. They have stood at that level since July 2015, when the central bank cut them for the second time that year to offset the impact of plunging oil prices.

Economists say Canada's economy could grow as much as 4 percent in the first quarter after a solid expansion in the second half of 2016. But the central bank has downplayed the sustainability of recent stronger-than-expected growth while its measures of core inflation have remained muted.

The market has largely given up on prospects for a rate hike this year. Reuters data showed the chances of that have sunk to 12 percent from around one-in-three at the last Bank of Canada rate announcement in April. BOCWATCH

Investors also awaited the minutes from the U.S. Federal Reserve's last policy meeting, while world stocks inched lower after China's sovereign credit rating was downgraded. 9:13 a.m. ET (1313 GMT), the Canadian dollar CAD=D4 was unchanged at C$1.3512 to the greenback, or 74.01 U.S. cents, according to Reuters data.

The currency traded in a range of C$1.3492 to C$1.3540.

It has recovered from a 14-month low of C$1.3793 set earlier this month, helped by a rally in oil prices and broader losses for the U.S. dollar amid diminishing expectations of a promised fiscal boost to the U.S. economy from President Donald Trump.

Last Thursday, the loonie touched its strongest in nearly one month at C$1.3457.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 1 Canadian cent to yield 0.698 percent, and the 10-year CA10YT=RR climbed 18 Canadian cents to yield 1.494 percent.

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