CANADA FX DEBT-Canadian dollar hits 3-week low as domestic demand softens

BY Reuters | ECONOMIC | 11/29/22 09:24 AM EST

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Canadian dollar falls 0.4% against the greenback

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Touches its weakest since Nov. 10 at 1.3557

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Canada's third-quarter GDP increases 2.9%

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Canadian bond yields rise across steeper curve

TORONTO, Nov 29 (Reuters) - The Canadian dollar weakened to its lowest level in nearly three weeks against its U.S. counterpart on Tuesday as data showed faster-than-expected GDP growth in the third quarter but a decline in domestic demand.

Canada's economy grew at an annualized rate of 2.9% in the third quarter, above analysts' expectations, driven by exports and non-residential structures, Statistics Canada data showed.

Final domestic demand fell 0.6%, while a preliminary estimate showed that October's GDP was unchanged after the economy grew by 0.1% in September compared to August.

Money markets continued to expect a 25 basis point interest rate hike by the Bank of Canada at a policy decision next week, while seeing a 25% chance of a larger move.

The Canadian dollar was trading 0.4% lower at 1.3554 to the greenback, or 73.78 U.S. cents, after touching its weakest since Nov. 10 at 1.3557.

The price of oil, one of Canada's major exports, rose on hopes for a relaxation of China's strict COVID-19 controls after rare protests in Chinese cities over the weekend. U.S. crude prices were up 1.6% at $78.49 a barrel.

Canadian government bond yields were higher across a steeper curve, with the 10-year up 4 basis points at 2.983%. (Reporting by Fergal Smith Editing by Bernadette Baum)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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