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* C$ at C$0.9916 versus US$, or $1.0085 * Positive signs from China, UK help lift sentiment * Investors still scratching heads about Bank of Canada By Alastair Sharp TORONTO, Oct 25 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday, tracking commodity and equity markets higher as signs of recovery in China and a bounce out of recession in Britain helped lift global sentiment. The resource-linked currency is sensitive to any clues that global appetite is picking up, and may have for now set aside Bank of Canada signals about the direction and timing of future interest rate moves. "It still seems to be a little bit confused and mixed in terms of the signals we're getting from the Bank," said Shaun Osborne, chief currency strategist at TD Securities. The central bank has in the past week whipsawed the markets with seemingly mixed messages on interest rates, before concluding on Wednesday interest rates are still likely to rise, but a slowing economy means higher rates have become "less imminent." "In the short term the market is more focused on the rebound we've had in commodities and stock markets around the world overnight," Osborne said. Gold and oil both rose after recent dips, while Asian and European equities were broadly positive. At 8:14 a.m. (1201 GMT) the Canadian dollar was at C$0.9916 to the greenback, or $1.0085, compared with C$0.9949, or $1.0051, at Wednesday's North American close. The British economy pulled out of recession in the third quarter, boosted by the Olympics in London. China said factory output should grow faster in the last quarter than in the prior three months. But Osborne said the optimism may be short-lived. "The short term rebound we're seeing in risk at the moment may well struggle to see much follow through," he said. The two-year bond was off 7 Canadian cents to yield 1.157 percent, while the benchmark 10-year bond fell 44 Canadian cents to yield 1.898 percent.