CANADA FX DEBT-C$ strengthens half a cent to two-week high vs US$

Mon Apr 29, 2013 5:33pm EDT
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* C$ at C$1.0116 vs US$, or 98.85 U.S. cents
    * U.S. crude, gold prices rise
    * U.S. data backs expectation Fed bond buying to continue
    * Canada monthly GDP data released on Tuesday

    By Solarina Ho
    TORONTO, April 29 (Reuters) - The Canadian dollar touched
its strongest level against the U.S. dollar in two weeks on
Monday as the greenback weakened broadly against most other
currencies following U.S. data that added to expectations the
Federal Reserve will maintain its current pace of stimulative
bond buying.
    Higher commodity prices also added to the positive tone for
the Canadian currency. The weaker U.S. dollar helped push both
gold and U.S. crude prices up, with oil extending gains by more
than $1 per barrel.  
    "It doesn't feel like (U.S. dollar) parity is imminent,
despite this move," said Don Mikolich, executive director,
foreign exchange sales at CIBC World Markets. "I think it's just
some fatigue on the top and a risk rally, and Canada's
benefited. I think further gains will be harder to come by." 
    The Canadian dollar finished the session at
C$1.0116 against the greenback, or 98.85 U.S. cents. This was
stronger than Friday's North American session finish of
C$1.0169, or 98.34 U.S. cents.
    The currency touched its strongest level since April 12,
when it traded as firm as C$1.0094.
    U.S. data showed consumer spending rose unexpectedly last
month as benign inflation helped household spending power. The
price index for consumer spending dipped 0.1 percent. The lack
of inflation pressure gives the U.S. central bank scope to
maintain its very easy monetary policy stance. 
    "It's really just broad-based U.S. dollar weakness. We're
seeing almost every currency has gained ground against the U.S.
dollar leading into the North American open," said Camilla
Sutton, chief currency strategist at Scotiabank.
    "Some of that has to do with shifting expectations for how
long the Fed will continue its pace of bond buying."
    Canada's dollar extended gains made on Friday after U.S.
figures showed economic growth sped up in the first quarter, but
not as much as expected. 
    The Canadian dollar ended the day mostly stronger against
other currencies after broadly underperforming earlier. 
    Canada's February GDP figures on Tuesday will be the next
economic data in focus. Markets are also waiting for the
announcement of who will be picked to be the next governor of
the Bank of Canada. 
    The price of Canadian government debt was mixed, with the
two-year bond flat, yielding 0.934 percent, and the
benchmark 10-year bond up 4 Canadian cents to yield
1.702 percent.