CANADA FX DEBT-C$ rallies to 7-week high on central bank action

Thu Jul 5, 2012 8:24am EDT
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* C$ hits 7-week high at C$1.01 vs US$ or 99.01 U.S. cents
    * Bond prices drift lower across the curve
    * ECB, BoE and China central banks move to stimulate

    By Claire Sibonney
    TORONTO, July 5 (Reuters) - The Canadian dollar climbed to
its highest in more than seven weeks against the U.S. dollar on
Thursday after central bank policy moves around the world to
stimulate the economy encouraged investors to take on riskier
    The European Central Bank cut interest rates to a record low
0.75 percent to breathe life into a deteriorating euro zone
economy and back up measures agreed by government leaders last
week to tackle the bloc's debt crisis. [ID:nL6E8I54IC}
    Following the ECB announcement, the Canadian dollar 
hit a session high of C$1.0100 versus the U.S. dollar, or 99.01
U.S. cents, from around C$1.0112, or 98.89 U.S. cents heading
into the release. 
    The currency was already on firmer ground before the ECB
news, after China surprised the market with another interest
rate cut and the Bank of England launched a third round of
monetary stimulus  
    "I think that all in all the news that we've had of the
central banks this morning is supportive of the theory that
central banks are committed to maintaining financial market
system stability and that is generally positive for risk assets
like Canada," said Camilla Sutton, chief currency strategist at
    Sutton cautioned however that there is "still tremendous
uncertainty" among investors, particularly ahead of ECB
President Mario Draghi's press conference on later on Thursday
and North American jobs data on Friday.
    By 8:12 a.m. (1212 GMT), the Canadian currency had retraced
most of its gains, sitting at C$1.0123 against the U.S. dollar,
or 98.78 U.S. cents, slightly firmer than Wednesday's North
American session close at C$1.0132 versus the greenback, or
98.70 U.S. cents.
    After breaking through the 200-day moving average, Sutton
said the next big test for the Canadian dollar was the 100-day
moving average around C$1.0055.
    Canadian bond prices were flat to lower across the curve.
Canada's two-year government bond was off 2 Canadian
cents to yield 1.038 percent, while the benchmark 10-year bond
 was down 7 Canadian cents to yield 1.718 percent.