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Mexican economy grows 0.3 pct in February from January

Credit: REUTERS/Carlos Jasso

Mexico's economy grew 0.3 percent in February from January and expanded 1.1 percent from February of 2018, the national statistics agency said on Friday.

* Canadian dollar rises 0.2% against the greenback

* Price of U.S. oil falls 1.7%

* Canadian bond prices gain across the yield curve

* Canada-U.S. 2-year spread hits narrowest in more than two weeks

TORONTO, April 26 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, following data that showed factors driving faster growth in the U.S. economy that are likely to be temporary.

U.S. economic growth accelerated in the first quarter, but the burst in growth was driven by trade and the largest accumulation of unsold goods since 2015, factors that are likely to reverse in the coming quarters.

The U.S. dollar fell to a session low against a basket of currencies after release of the data, while the price of oil, one of Canada's major exports, retreated from its strongest bull run in at least a year amid efforts to resume Russian oil flows that were interrupted by contamination.

U.S. crude prices were down 1.7% at $64.11 a barrel.

At 9:13 a.m. (1313 GMT), the Canadian dollar was trading 0.2% higher at 1.3462 to the greenback, or 74.28 U.S. cents. The currency, which on Wednesday touched a nearly four-month low at 1.3522, traded in a range of 1.3460 to 1.3498.

Gains for the loonie came after Bank of Canada Governor Stephen Poloz said on Thursday that the central bank could start raising rates again "sometime down the road," although such a move will depend on whether upcoming economic data backs up its assessment that a current slowdown is only temporary.

On Wednesday, the Bank of Canada held rates steady but took a more dovish stance than in recent releases, removing wording around the need for "future hikes," while lowering its growth forecasts for 2019.

For the week, the loonie was on track to decline 0.5%.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 2.5 Canadian cents to yield 1.537% and the 10-year climbed 17 Canadian cents to yield 1.687%.

The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 3.8 basis points to a spread of 74.2 basis points in favor of the U.S. bond, the narrowest since April 9. (Reporting by Fergal Smith; Editing by Steve Orlofsky) ((fergal.smith@thomsonreuters.com; +1 416 941 8113;)) Keywords: CANADA FOREX/

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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