CANADA FX DEBT-C$ at more than 13-month high in Fed afterglow

Fri Sep 14, 2012 8:18am EDT
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* C$ up at C$0.9640 vs US$, or $1.0373
    * Bond prices fall across the curve

    By Claire Sibonney
    TORONTO, Sept 14 (Reuters) - The Canadian dollar popped to a
more than 13-month high versus the U.S. dollar on Friday,
building on momentum a day after the Federal Reserve finally
pulled the trigger on a bold new plan to stimulate the U.S.
    The Fed's decision to pump $40 billion into the economy each
month until the country's weak jobs market turns up bolstered
the positive mood that has dominated markets since the European
Central Bank announced its own plan to cut borrowing costs of
struggling euro zone members. 
    "The market's view is that the U.S. dollar will continue to
come under pressure just given the stimulus going on in the
U.S.," said Blake Jespersen, managing director of foreign
exchange sales at BMO Capital Markets.
    "There's been a lot of cash that's been sitting on the
sidelines for many many months now, so even if a small
percentage of that comes back into the market you're going to
see a tremendous movement in some of these risk-based assets."
    At 8:06 a.m. (1206 GMT), the Canadian dollar stood
at C$0.9640 versus the greenback, or $1.0373, firmer than
Thursday's North American session close at C$0.9683, or
    From a technical standpoint, the Canadian dollar looks
overbought, but given the broad risk rally it likely still has
room to advance toward C$0.95, Jespersen said.
    "The Canadian dollar is not even a leader right now ... it's
still trailing some of its other major peers, the Australian
dollar, the New Zealand dollar by a fair margin, so I think
there's at least another cent in this trade."
    Analysts on Friday will also be watching domestic
manufacturing sales data for July due at 8:30 a.m.
    Meanwhile, euro zone finance ministers were meeting in
Cyprus, hoping to build on progress made this month, following
the plans announced by ECB President Mario Draghi and a German
court's green light this week for the euro zone's new bailout
    Canadian government bond prices slipped across the curve as
safe-haven assets continued to fall out of favor. The two-year
bond was down 8 Canadian cents to yield 1.204
percent, while the benchmark 10-year bond tumbled 80
Canadian cents, yielding 1.965 percent.