* Canadian dollar rises to 93.40 U.S. cents
* Currency market disregards flat GDP figure for July
* Bonds gain across the board (Updates to close)
By Ka Yan Ng
TORONTO, Sept 30 (Reuters) - The Canadian dollar closed higher against the U.S. currency on Wednesday as it tracked buoyant oil and gold prices and shrugged off figures that showed the domestic economy did not grow in July.
The price of oil
The Canadian dollar closed at C$1.0707 to the U.S. dollar, or 93.40 U.S. cents, up from Tuesday's finish of C$1.0855 to the U.S. dollar, or 92.12 U.S. cents. During the day, it hit a one-week high at C$1.0672 to the U.S. dollar, or 93.70 U.S. cents.
"Certainly commodity prices are generally helping. We've seen quite a strong rise in oil prices, back towards $70 a barrel and that is typically a good source of support," said Shaun Osborne, chief currency strategist at TD Securities.
Government data on Wednesday showed there was no economic growth in Canada in July, disappointing expectations for a 0.5 percent increase in gross domestic product after June's 0.1 percent month-on-month rise. [ID:nOTT003730]
The currency took the report in stride, even though the stagnant growth offered a downbeat start to the third quarter. Helping to counterbalance the GDP figures, home resale prices climbed for a third straight month in July, up 1.6 percent, the Teranet-National Bank Composite House Price Index showed. [ID:nN30213981] [ID:nN30211709]
"Most people realize the economy, from a growth point of view, is still struggling," Osborne said. "There are other positive things to offset the simplistic look at the growth number. We generally think that Canada is in a good fundamental position overall still."
CIBC World Markets said in a report on Wednesday that it expects the U.S. dollar will weaken further in 2010 on concern about the U.S. current account deficit, but that the Canadian dollar is unlikely to strengthen much in response.
Beyond 2011, however, CIBC chief economist Avery Shenfeld said the Canadian dollar will have "room to run" against the greenback if commodity price gains improve Canada's trade balance and if the United States lets its inflation rate run up faster than other countries.
BONDS RISE
Canadian bonds were higher across the curve after seesawing earlier in the day on mixed U.S. data.
The U.S. economy contracted at slower pace than previously thought in the second quarter, but the market took a further decline in private payrolls in September as another indication that recovery from recession would be patchy. [ID:nN30198553]
Building on that sentiment, another report showed business activity in the U.S. Midwest failed to return to growth in September [ID:nN30198553], boosting the appeal of safe-haven government bonds.
The two-year bond