CANADA FX DEBT-C$ ends stronger ahead of ECB cash boost

Tue Feb 28, 2012 4:20pm EST
 
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* C$ ends stronger at C$0.9954 vs US$, or $1.0046

* C$ hits one-week high of C$0.9941 vs US$, or $1.0059

* Strong U.S. consumer data also supports

* Bond prices mixed

By Andrea Hopkins

TORONTO, Feb 28 (Reuters) - The Canadian dollar hit a one-week high against its U.S. counterpart and ended stronger on Tuesday as a looming injection of cheap cash by the European Central Bank boosted riskier assets and kept the U.S. dollar on weaker footing.

Risk appetite reigned as investors focused on the ECB's Longer Term Refinancing Operation (LTRO), an offer of cheap money on Wednesday aimed at providing support for companies that have been starved of investment funds.

The ECB's first operation in December helped fuel a rally in riskier assets by encouraging banks to borrow from the central bank and purchase higher-yielding European sovereign bonds. This helped bring the yields of debt-burdened countries such as Italy and Spain down significantly and allayed contagion fears stemming from Greece.

"There is a lot of anticipation built up about the LTRO tomorrow and how exactly it will fall and how that should be interpreted," said Camilla Sutton, chief currency strategist at Scotia Capital.   Continued...