CANADA FX DEBT-C$ hits 3-month peak on BoC, stimulus hopes
* C$ hits high of C$0.9913 vs US$, or $1.0088 * Supported by expectation BoC will raise rates * Currency hits record against euro * Weak China data keeps stimulus hopes alive * Bond prices mostly lower By Jennifer Kwan TORONTO, Aug 9 (Reuters) - Canada's dollar climbed to a fresh three-month peak against its U.S. counterpart on Thursday, buoyed in part by comments from the Bank of Canada, and as broader markets rose on hopes some central banks will act to stimulate their economies. The Canadian currency touched C$0.9913 against the U.S. dollar, or $1.0088, its strongest since May 4 after Bank of Canada Governor Mark Carney on Wednesday argued the case for raising rates in an interview with the BBC in London, even though he said a global slowdown was having an impact on Canada's economy. Against the euro, the Canadian dollar rose to C$1.2165, or 82.20 euro cents, and hit multi-month highs against sterling and the yen. "It's mainly reminding the market that the Bank of Canada is not ready to cut and that the next move they have in mind is a hike," said Charles St-Arnaud, economist and currency strategist at Nomura Securities in New York. But St-Arnaud said that was just a part of the bigger picture. The currency has gotten a boost as foreigners favor Canadian assets as a safe-haven given the turbulent global economy. At around 1:10 p.m. EDT (1710 GMT), the Canadian dollar was at C$0.9922 versus the U.S. currency, or $1.0080, higher than Wednesday's close at C$0.9946 against the greenback, or $1.0054. U.S. stocks stayed near four-year highs and European shares nudged closer to their peak of the year on Thursday. A key catalyst for the move higher in global stocks appeared to be data from China that showed annual consumer inflation hit a 30-month low last month and industrial output grew at it slowest pace in some three years, keeping alive hopes that policymakers would take more action to keep China's growth on track. Stock markets around the world rose on Friday after U.S. jobs data eased concerns about global growth but supported hopes of further policy easing by the Federal Reserve. Last week's signal by European Central Bank President Mario Draghi that it may ease borrowing costs for Spain and Italy provided further optimism. ECB governing council member Christian Noyer said on Thursday the central bank is determined to bring down those borrowing costs and should be ready to intervene decisively in bond markets very soon. "The general theme seems to be in place for the market expecting central bank action out of the ECB and the Fed," said John Curran, senior vice president at CanadianForex. GlOBAL INFLUENCES IN FOCUS The broader market influences overcame domestic data. Canada's trade deficit unexpectedly soared to C$1.81 billion in June as imports hit a record high while exports barely edged up, Statistics Canada data showed on Thursday. The data confirm that Canada, which relies heavily on trade, is suffering as Europe's economic crisis shows no sign of ending. Canadian housing starts also slowed more sharply than expected last month. The seasonally adjusted annualized rate was 208,500 units in July, compared with 222,100 units in June, data from the Canada Mortgage and Housing Corp showed on Thursday. Jeremy Stretch, head of foreign exchange strategy for CIBC in London, said the currency would likely stay within a narrow range, between C$0.9920 to C$0.9970. "The fact that we haven't seen the Canadian dollar getting down towards C$0.99 is more of a function of the broader risk dynamics supporting the U.S. side of the equation," said Stretch. Canadian bond prices were mostly lower. The two-year bond fell 3 Canadian cents to yield 1.177 percent, and the benchmark 10-year bond fell 3 Canadian cents to yield 1.820 percent.
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