CANADA FX DEBT-C$ firmer, helped by equity, commodity gains

Tue Jun 12, 2012 2:14pm EDT
 
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* Firms to C$1.0269 vs US$, or 97.38 U.S. cents
    * Rises with North American equities, some commodities

    By Allison Martell	
    TORONTO, June 12 (Reuters) - Canada's dollar firmed against
its U.S. counterpart on Tuesday, helped by gains in North
American equity markets and some commodity prices, including
U.S. crude and gold.	
    Both Canadian and U.S. stock indexes rose , paring some of
the heavy losses seen on Monday, w hen investors worried about
the effectiveness of Europe's plan to bail out Spanish banks.
The Canadian dollar also weakened on Monday.	
    "Part of it may have been a bit of an over reaction
yesterday," said Mark Chandler, head of Canadian fixed income
and currency strategy at RBC Capital Markets. 	
    "People were a little frustrated in the lack of details on
the Spanish banking package, but when everything is said and
done, it's obviously better that we get some sort of
commitment."	
    Chandler said the small bounce in North American equity
markets and a modest rise in the price of some commodities also
supported the resource-linked currency.	
    U.S. crude and gold prices rose, and commodity prices were
broadly higher, with the benchmark Thomson Reuters-Jeffries CRB
Index up 0.1 percent. [. TO] [O /R] 	
    At around 1:30 p.m. (1730 GMT), the Canadian dollar was at
C $1.0269 a gainst the U.S. currency, or 9 7.38 U .S. cents,
compared with Monday's close at C$1.0312, or 96.97 U.S. cents.	
    	
    EUROPE FEARS LINGER	
    With Tuesday's gains, the currency was little changed from
Friday's close at C$1.0270, or 97.37 U.S. cents.	
    A weekend deal by the 17-nation euro zone to lend Madrid up
to 100 billion euros ($125 billion) for its bank rescue fund,
more than an initial audit suggests it is likely to need, was
aimed at reassuring investors and erecting a new firewall.	
    But investors remained wary about the broader euro zone debt
crisis. Concerns that the Greek election on June 17 would force
a disorderly exit from the euro zone were rekindled by a report
that EU officials were considering ways to manage the fallout.
 	
    "Risk currencies are trading marginally better against their
safe haven counterparts, but I think that doesn't necessarily
speak to a larger trend. I think it's really just a
consolidation move," said Greg Moore, foreign exchange
strategist at TD Securities.	
    Canadian bond markets were mostly lower across the curve.
Canada's two-year bond fell 5 Canadian cents to yield
1.022 percent, while the benchmark 10-year bond 
dropped 43 cents to yield 1.806 percent.