CANADA FX DEBT-C$ climbs to highest in over 12 months

Mon Sep 10, 2012 12:00pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ hits 12-month high at C$0.9755 vs US$, or $1.0251
    * Bond prices little changed across the curve

    By Claire Sibonney
    TORONTO, Sept 10 (Reuters) - The Canadian dollar hit its
loftiest level in more than one year against the greenback on
Monday, outperforming other major currencies on last week's
strong domestic employment report and hopes of more policy
easing in the United States.
    The currency hit a session high of C$0.9755 to the
U.S. dollar, or $1.0251, its strongest level since Sept. 1,
2011.
    "The risk backdrop remains positive here. The weaker-than-
expected U.S. employment number has fueled the fire for the
market looking for a potential nod to QE3 out of the Fed," said
Matt Perrier, a director of foreign exchange sales at BMO
Capital Markets.
    Canada on Friday reported the economy added 34,300 jobs in
August, topping expectations of analysts surveyed by Reuters.
Canada has recouped all the jobs lost in the recession, and
employment is 176,600 higher than in August 2011, with most of
the increases in full-time positions. 
    By comparison, U.S. jobs growth slowed sharply in August.
Nonfarm payrolls rose only 96,000, well below what would
normally be needed to put a dent in the jobless rate and setting
the stage for the Federal Reserve to pump additional money into
the sluggish economy when it meets later this week.
 
    Traders also cited improved risk appetite in general after
the European Central Bank last week unveiled a plan to cut
borrowing costs for its most indebted countries.
    At 11:36 a.m. (1536 GMT), the Canadian dollar 
stood at C$0.9762 against the greenback, or $1.0244, firmer than
Friday's North American session close at C$0.9782, or $1.0223.
    Perrier pointed to the next resistance level around         
C$0.9725, near the August 2011 high. Breaking through that could
open up the way toward C$0.95 and then C$0.94.
    But many analysts are still skeptical that the Canadian
dollar's recent rally has much further to go in the near term.
    "We're of the opinion that it may not well be so much of a
done deal that the Fed does more QE," said Jeremy Stretch, head
of currency strategy at CIBC in London. "So it may be the case
that at this sort of levels there's potentially some small
opportunities just to add to some (U.S.) dollar/CAD long
positions on the basis that the U.S. dollar may well get a
little bit of a post-Fed bounce," 
    U.S. and global stocks dipped as investors cashed in some of
last week's sharp gains ahead of a German ruling on the euro
zone's new bailout fund, Dutch elections and the conclusion of
the Fed's two-day policy meeting on Thursday. 
    Weak economic data in China reinforced prospects for more
stimulus measures there. 
    Canadian government bond were little changed across the
curve, with the two-year bond off half a Canadian
cent to yield 1.179 percent and the benchmark 10-year bond
 up 6 Canadian cents, yielding 1.849 percent.