CANADA FX DEBT-C$ strengthens as greenback rally ebbs

Thu Mar 15, 2012 1:37pm EDT
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* C$ at C$0.9914 vs US$, or $1.0086
    * U.S. economic data boosts sentiment
    * Bond prices lower across the curve

    By Jon Cook	
    TORONTO, March 15 (Reuters) - The Canadian dollar
firmed against its U.S. counterpart on Thursday as
U.S. Treasury yields eased and the greenback's rally ebbed, but
it was still down against most other major currencies. 	
    Canada's role as the largest U.S. trading partner has
recently helped it outperform other commodity-linked currencies
as strong U.S. data and a more optimistic economic tone from the
Federal Reserve have boosted North American sentiment.	
    "For some time you've had the Canadian dollar being driven
by risk sentiment and that has largely been gauged against the
S&P 500," said Mazen Issa, macro strategist at TD Securities.	
    The S&P 500 index hit 1,400 for the first time in
four years on Thursday as U.S. economic data, including weekly
initial jobless claims and producer prices on Thursday,
continued to underpin the theme of a strengthening U.S. economy.
    The Canadian dollar touched a session high at C$0.9906
versus the U.S. dollar, or $1.0094, but remained short of this
week's low at C$0.9881. 	
    At 1:15 p.m. (1715 GMT), the Canadian dollar was at
C$0.9914 versus the U.S. currency, or $1.0086, up from
Wednesday's North American session close at C$0.9930 versus the
U.S. dollar, or $1.0070. 	
    On Wednesday the Canadian dollar hit its strongest level
against the Australian currency this year, breaking
through the 200-day moving average and testing an overnight high
at C$1.0450. 	
    But after testing technical thresholds against the
Australian and New Zealand currencies and against the euro,
Canada's dollar retreated on Thursday. 	
    "That might have caused a few of the short Canadian dollar
positions to get squeezed on the move back up on the cross,"
said David Bradley, a director of foreign exchange trading at
Scotia Capital. 	
    Canada's resource-reliant dollar was also held back after
top consumer China said on Wednesday it must embrace slower
growth to keep its economy from faltering, hurting prices of
industrial metals such as copper. 	
    Canadian bond yields rose above their yearly highs set on
Wednesday as risk appetite improved. The two-year bond
 was down 5 Canadian cents to yield 1.266 percent,
while the 10-year bond dropped 38 Canadian cents to
yield 2.197 percent.