March 1, 2012 / 1:32 PM / 5 years ago

CANADA FX DEBT-C$ rises for fourth day in risk rally

3 Min Read

* C$ rises to $0.9856 vs US$ or $1.0146

* Bond prices ease across curve

By Claire Sibonney

TORONTO, March 1 (Reuters) - The Canadian dollar rose against the U.S. dollar for the fourth straight day on Thursday as the lingering positive impact of a huge cash injection by the European Central Bank outweighed fears that further U.S. monetary easing could be on hold.

U.S. Federal Reserve Chairman Ben Bernanke offered a tempered view of the economy on Wednesday, pouring cold water on the notion that recent upbeat data heralded a stronger recovery.

But market watchers hoped Bernanke's semi-annual testimony on monetary policy later in the day before the U.S. Senate Banking Committee may temper the negative reaction to his comments in the previous session.

"We're seeing a slightly more risk-orientated day and possibly people are just questioning whether Mr. Bernanke might try to counter some of the market reaction after the testimony on Capitol Hill yesterday, so for the moment at least, the CAD is remaining reasonably well supported," said Jeremy Stretch, head of FX strategy at CIBC in London.

Investors will also look to Canada's fourth-quarter current account data and weekly jobless claims south of the border for further direction.

At 8:15 a.m. (1315 GMT), the Canadian dollar stood at C$0.9856 versus the U.S. dollar, or $1.0146, versus Wednesday's North American finish at C$0.9895, or US$1.0106.

Stretch noted that the Canadian currency triggered stops below C$0.9880 on Wednesday, which could open the way for a test toward bids down around the C$0.9840-50 region.

Also on Wednesday, the euro and Australian dollars notched their biggest one-day drops in months against the Canadian currency.

"I'm particular interested in looking at euro/CAD going lower and also Aussie/CAD going lower. There's probably a little more interest on the crosses as opposed to dollar/CAD," he added.

The ECB's massive injection of 529.5 billion euros ($708 billion) into the region's banking system was still seen helping sentiment, as well as improving economic data in Asia.

Markets on Thursday also focused on a European Union summit and a meeting of euro zone finance ministers to discuss Greece's progress on meeting the terms of its bailout. Analysts said this may highlight the risks of Greece struggling to comply with the harsh austerity measures demanded of it.

Canadian bond prices eased across the curve, with the two-year bond down 4 Canadian cents to yield 1.133 percent. The 10-year bond fell 27 Canadian cents to yield 2.016 percent.

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