Market News

By Fergal Smith

• Canadian dollar gains 0.1% against the greenback
• Trades in a range of 1.3459 to 1.3489
• Price of U.S. oil settles 2.9% lower
• 2-year yield touches an 8-day high at 2.987>#/li###

TORONTO, Sept 26 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday, but the move was limited as oil prices tumbled and ahead of domestic GDP data that could guide expectations for the pace of additional interest rate cuts by the Bank of Canada.
The loonie was trading 0.1% higher at 1.3470 per U.S. dollar, or 74.24 U.S. cents, after moving in a range of 1.3459 to 1.3489.
The decline in oil prices has kept gains in check for the loonie, said Amo Sahota, director at Klarity FX in San Francisco.

"It doesn't look like anybody wants to make a big decision on directional moves," Sahota added. "Tomorrow morning's Canadian GDP data ... might give the market something to get its teeth into."
Economists expect Canadian GDP data, due on Friday, to show that the economy grew 0.1% in July from June. The BoC has said it wants to see growth pick up to absorb economic slack.
Investors expect the central bank to ease 67 basis points in total in the final two meetings of the year, implying a high probability of one unusually large half-percentage-point move.

The central bank has cut three times since June, moving in quarter-percentage-point steps. Its benchmark rate is at 4.25%.
The price of oil , one of Canada's major exports, settled 2.9% lower at $67.67 a barrel on the prospect of Saudi Arabia raising output.
Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries after the release of data that suggested the American labor market remained fairly healthy.

The Canadian 2-year yield was up 1.9 basis points at 2.979%, after earlier touching its highest level since Sept. 18 at 2.987%.