CANADA FX DEBT-C$ rallies with commodities, hits record vs euro
* C$ at C$1.0168 vs US$, or 98.35 U.S. cents * C$ climbs to record high against euro * Bond prices mixed across the curve By Claire Sibonney TORONTO, July 13 (Reuters) - The Canadian dollar climbed to a one-week high against the greenback on Friday and a record peak against the euro after Chinese economic growth data came in roughly in line with expectations, lifting market sentiment for commodities and commodity-linked currencies. "Today what we have is a somewhat weaker U.S. dollar across the board and the commodity bloc of currencies doing fairly well, really because the Chinese data not as bad as the whisper number but bad enough that it still insights the potential for monetary and fiscal stimulus," said Camilla Sutton, chief currency strategist at Scotiabank. China's economy grew at its slowest rate in three years in the second quarter to its slackest pace in more than three years but that highlighted the need for more growth-oriented policy vigilance from Beijing, a prospect which boosted prices for key Canadian exports like oil and copper. "The rumor yesterday was that it was wildly going to disappoint, and so not having disappointed to that extent, combined with the potential for further stimulus is positive for global growth currencies," added Sutton. At 8:14 a.m. (1214 GMT), the Canadian dollar was at C$1.0168 versus the greenback, or 98.35 U.S. cents, up from Thursday's close at C$1.0186 against the U.S. dollar, or 98.17 U.S. cents. Against the euro, the Canadian dollar advanced to C$1.2379, or 80.78 euro cents, its strongest level against the common currency since it was created in January 1999. The euro was broadly subdued after Moody's surprised markets with a two-notch credit ratings cut for Italy, accompanied by a warning that more downgrades could come. The downgrade serves as a potent reminder that despite recent efforts by euro zone policymakers, the single currency bloc and especially its periphery, remain mired in debt. For the Canadian dollar, Sutton said the Bank of Canada meeting on Tuesday is the biggest near-term risk. "I think CAD is shockingly strong considering ... that at the meeting we would expect the statement to sound less hawkish than it did in June." A Reuters poll showed the Bank of Canada is expected to keep interest rates on hold until the second quarter of 2013, as a slowing global economy hurts the domestic outlook and as Ottawa's new mortgage rules take pressure off the central bank to cool the country's housing market. Canadian bond prices were mixed across the maturity curve. The two-year government bond was off 2 Canadian cents to yield 0.974 percent, while the benchmark 10-year bond was up 5 Canadian cents to yield 1.625 percent.
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