CANADA FX DEBT-C$ stronger as oil price rises; investors eye risk

Tue Feb 17, 2015 9:32am EST
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* Canadian dollar at C$1.2380, or 80.76 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, Feb 17 (Reuters) - The Canadian dollar hit a
two-week high against its U.S. counterpart on Tuesday, helped by
the price of crude oil nearing a 2015 peak.
    The loonie, as Canada's currency is colloquially known, has
struggled against the greenback in recent months on the back of
slumping crude coupled with a shock interest rate cut.
    Oil's rise to $62 a barrel helped reinvigorate the currency
of Canada, a major crude producer, although it may not be enough
to support it over the longer term, one strategist said. 
    "With the degree that the Canadian dollar collapsed, almost,
in January, there's some risk that was overshooting ... and we
could spend the next few weeks consolidating or even reversing
before the trend reasserts itself," said Adam Cole, head of
foreign exchange strategy at Royal Bank of Canada.
    Investors did not seem to panic as Greece and its eurozone
creditors broke off debt talks without a deal.  
    "Markets are quite risk-tolerant today," Cole said. "It's
hard to put a finger on (the reason for) it."
    The Canadian dollar was at C$1.2380 to the
greenback, or 80.76 U.S. cents, stronger than Friday's official
Bank of Canada close of C$1.2461, or 80.25 U.S. cents. Trading
was limited on Monday due to North American holidays, when the
loonie closed at C$1.2465, according to Thomson Reuters data.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 2 Canadian
cents to yield 0.438 percent and the benchmark 10-year
 down 42 Canadian cents to yield 1.468 percent.

 (Reporting by Alastair Sharp; Editing by Lisa Von Ahn)