CANADA FX DEBT-C$ ends stronger; best week since early March
* C$ at C$0.9926 vs US$, or $1.0075 * German data lifts market * IMF moves to boost euro zone funding * Market shrugs off soft Canadian inflation data * Bonds prices mostly lower By Jon Cook TORONTO, April 20 (Reuters) - The Canadian dollar ended its best week against its U.S. counterpart since early March on Friday as debt concerns eased in Europe ahead of key French elections and the Bank of Canada's rosier outlook raised growth expectations domestically. Concerns about the euro zone's financial stability had pressured the Canadian currency, chipping away at sharp gains earlier in the week after the Bank of Canada surprised the market with a more bullish economic forecast and signaled it was starting to think more seriously about tightening monetary policy. But as the week came to a close, fears about Spain's ability to finance its considerable debt waned in the face of an unexpectedly upbeat reading of German business morale. The broader rise in risk appetite helped support the Canadian currency. The Canadian dollar ended Friday's North American session at C$0.9926 against the greenback, or $1.0075, up slightly from Thursday's finish at C$0.9952 against the U.S. dollar, or $1.0048. It was up about 0.7 percent for the week, its best weekly jump since the beginning of March. R euters data and figures from the Commodity Futures Trading Commission showed speculators increased their bets on a stronger Canadian dollar this week. "It's the Bank of Canada influence. It's the hawkish tone," said Jack Spitz, a managing director of foreign exchange trading at National Bank Financial. Spitz noted that the Canadian dollar fell against most Europe-based currencies and generally traded "sideways" during the session, but "if the metrics are to measure Canada versus the U.S. dollar, then the overall view is stable to stronger." The euro also got a boost after the Group of 20 nations on Friday pledged more than $430 billion to better than double the International Monetary Fund's lending capacity and protect the global economy from the euro zone's debt crisis. Most analysts, however, expect the euro to remain range bound ahead of Sunday's first round of the French vote. Financial markets were nervous the policies espoused by the expected eventual winner, Socialist Francois Hollande, could be detrimental to the economy. Canadian inflation data on Friday also gave investors some pause, but its negative influence was short-lived. Canada's annual inflation rate dipped to 1.9 percent in March from 2.6 percent in February, slightly below the 2.0 percent forecast by market operators. Low inflation removes pressure from the Bank of Canada to resume raising rates. But analysts noted the central bank's hawkish tone this week was based largely on the longer-term outlook. "The Bank of Canada's warning about a rate hike is more about its expectations that the economy will grow fast enough to create a potential inflation risk in 2013 rather than any immediate inflation pressures," said Avery Shenfeld, chief economist at CIBC World Markets. Several of the country's primary dealers this week pulled forward their forecasts for an interest rate hike, according to a Reuters poll, with the central bank now expected to tighten policy early next year. Canadian government bond prices were mostly lower. The two-year bond shed 3 Canadian cents to yield 1.352 percent. The benchmark 10-year bond was down 20 Canadian cents to yield 2.070 percent.
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