C$ weakens from near 1-week high, buoyed by OPEC deal

TORONTO: The Canadian dollar fell back from a nearly one-week high against its US counterpart on Thursday as the buzz from a deal between major oil producers to limit output wore off and investors fretted about the health of Deutsche Bank.

The slip for the loonie followed a 0.7 percent advance on Wednesday, its biggest in nearly four weeks, after the Organization of the Petroleum Exporting Countries agreed to limit crude output at its policy meeting in November.

"If you were really bullish on Canada, you would point to it (the OPEC deal) and say this could be the embryonic stage of a Canadian economy resurgence and strength for the loonie," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets.

But he said that troubles at Deutsche, whose US-listed shares hit a record low on fresh concerns about the stability of Germany's largest lender, were pressuring a range of risk-friendly currencies including the Canadian dollar.

The Canadian dollar settled at C$1.3149 to the greenback, or 76.05 US cents, weaker than Wednesday's close of C$1.3109, or 76.28 US cents.

Oil prices jumped more than 1 percent, adding to a sharp jump on Wednesday, when OPEC said its members had agreed to cut output for the first time in eight years.

The Canadian currency's weakest level of the session was C$1.3184, while it touched its strongest since Friday at C$1.3048.

On Tuesday, the loonie hit its weakest in nearly six months at C$1.3281, pressured by recent disappointing domestic economic data and a more dovish tone from the Bank of Canada.

Domestic gross domestic product data for July is due on Friday. The economy is expected to have grown by 0.3 percent, which would reinforce expectations that it rebounded in the third quarter after contracting in the second.

Canadian government bond prices were higher across the yield curve, with the two-year up 3.5 Canadian cents to yield 0.494 percent and the benchmark 10-year rising 28 Canadian cents to yield 0.951 percent.

The 10-year yield fell 2.1 basis points further below its US counterpart as the rate of growth for the US economy was revised higher for the second quarter. That left the spread at -60.3 basis points, its widest since March 30.