CANADA FX DEBT-C$ closes near 2-wk high, above 99 cents

Thu Apr 1, 2010 4:51pm EDT
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 * C$ climbs to 99.17 U.S. cents
 * Bonds higher, focus on Friday U.S. jobs report
 (Updates to session close)
 By Ka Yan Ng
 TORONTO, April 1 (Reuters) - The Canadian dollar zipped
above the 99 U.S. cent level on Thursday for the first time in
almost two weeks, extending its gains against the greenback as
the price of oil hit an 18-month high and other riskier assets
found favor.
 The currency finished at C$1.0084 to the U.S. dollar, or
99.17 U.S. cents, up from Wednesday's finish at C$1.0158 to the
U.S. dollar, or 98.44 U.S. cents.
 "The primary credit goes to the risk-on trade that's
prevailing in most markets. The Canadian dollar is enjoying the
updraft," said Eric Lascelles, chief economics and rates
strategist at TD Securities.
 Oil neared $85 a barrel, drawing fresh inflows from
investors at the start of the new quarter, while global stocks
moved higher, backed partly by upbeat European and Chinese
manufacturing data that fueled optimism about the global
economic recovery. [O/R]  [MKTS/GLOB]
 Data south of the border added to hopes for economic
recovery in the United States as jobless claims fell in the
latest week and U.S. factory activity in March hit its highest
level in more than 5-1/2 years. [ID:nN01114317]
 Taking its cue from the rise in the price of oil, a major
Canadian export, the Canadian dollar reached its highest level
since March 19 -- the same day the Canadian dollar last looked
primed to test parity with the greenback.
 Canada's dollar has again moved within striking distance of
hitting parity with the U.S. currency, reaching as high as
C$1.0067 to the U.S. dollar, or 99.33 U.S. cents, but still
below the highest point reached in March at 99.38 U.S. cents.
 Parity has not been reached since July 2008.
 The Canadian dollar has begun the second quarter on a
strong note, after notching a bit more than a 3 percent gain
against the greenback in the first three months of the year.
 Part of the rise is backed by a string of firm economic
data, most recently with a report that showed GDP for January
exceeded expectations. [ID:nN31248585]
 The U.S. jobs report for March on Friday is a potential
catalyst to push it closer or through parity, depending on the
outcome of the data and liquidity conditions as Canada will be
closed for the Good Friday holiday.
 "You can't rule it out," said Paul Ferley, assistant chief
economist at Royal Bank of Canada. He said if the jobs report
suggests the timing of the first U.S. interest rate hike will
be in the fourth quarter, or later, it could boost the Canadian
dollar since Canada's tightening cycle is expected to start
around midyear.
 Canadian bond prices were flat to higher across the curve,
outperforming U.S. Treasury market, as investors waited for
Friday's U.S. jobs report and largely looked past Thursday's
stronger than expected U.S. data.
 "It's important to emphasize how small the movement is. It
does not necessarily represent a groundswell of attitude change
among investors," Lascelles said.
 "This might be some rejigging more than anything else in
advance of the weekend and (U.S.) payrolls."
 There may also be more trepidation around the U.S. jobs
data than usual, in part because most markets will be shut for
 The two-year government bond CA2YT=RR edged up 3 Canadian
cents to C$99.59 to yield 1.722 percent, while the 10-year bond
CA10YT=RR gained 10 Canadian cents to C$101.50 to yield 3.557
 Canadian bond prices have generally been on the decline as
market players increasingly price in the probability that the
Bank of Canada will hike interest rates in July.
 (Reporting by Ka Yan Ng; editing by Rob Wilson)