CANADA FX DEBT-C$ hits 6-week high, helped by equities, technicals

Tue Apr 2, 2013 4:36pm EDT
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* C$ at C$1.0149, or 98.53 U.S. cents
    * Breach of technical levels prompts stop-loss orders
    * Equity outlook gives boost to Canadian dollar
    * Broad U.S. dollar weakness helps

    By Alastair Sharp
    TORONTO, April 2 (Reuters) - The Canadian dollar hit its
strongest level against its U.S. counterpart in six weeks on
Tuesday, boosted by breaches of key technical levels as a major
U.S. equity index neared an all-time high.
    The loonie, as Canada's currency is colloquially known,
pushed through a recent tight range between C$1.02 and C$1.0140,
as did its commodity-linked cousins the Australia and New
Zealand dollars, the latter also hitting a six-week high.
    "There has been a change in market thinking here," said
Shaun Osborne, chief currency strategist at TD Securities. "We
transitioned from a 'buy U.S. dollar dips' market to a 'sell
U.S. dollar rallies' market over the past couple of weeks."
    Osborne said the loonie's resurgence prompted stop-loss
orders after breaking below a 40-day moving average around
C$1.0160 and last week's low around C$1.0140.
    It ended the session trading at C$1.0149 to the
greenback, or 98.53 U.S. cents, compared with C$1.0167, or 98.36
U.S. cents, at Monday's North American close. That was its
strongest close since Feb. 19.
    "In the Asian session we made slow and steady gains, then we
retraced half of that in the North American session," said
Camilla Sutton, chief currency strategist at Scotiabank. "We got
pulled along with the Aussie today."
    The Australian central bank held interest rates steady but
said further cuts could be required, while also citing an
improved global outlook, Sutton said.
    She also cited technical reasons for the loonie's strength,
including a breach of the 50-day moving average at C$1.0147 and
a Fibonacci retracement at C$1.0141.
    The price of Canadian government debt was lower across the
curve, with the two-year bond off 2 Canadian cents to
yield 1.003 percent, and the benchmark 10-year bond 
falling 26 Canadian cents to yield 1.876 percent.
    "It's more U.S. dollar weakness than Canadian dollar
strength, I would say," said Adam Cole, global head of foreign
exchange strategy at Royal Bank of Canada. "The fact that
equities are doing better is also helping."
    The gain coincided with a decent gain in U.S. stock markets
that pushed the broad-based S&P 500 closer to an all-time