CANADA FX DEBT-Economic outlook, commodities boost C$

Wed Dec 1, 2010 4:54pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

   * C$ rises to 98.33 U.S. cents
 * Bonds fall across curve as risk appetite mounts
 (Updates to close, adds details, commentary)
 By Claire Sibonney
 TORONTO, Dec 1 (Reuters) - The Canadian dollar was firmer
against its U.S. counterpart on Wednesday, supported by strong
global economic data and new hope for debt-strapped euro zone
 The upbeat economic outlook saw riskier assets being bought
across the board, pushing up equities and commodity prices.
 U.S. crude oil futures jumped more than 3 percent to end at
a two-week high as U.S. private sector hiring posted its
biggest gain in three years, while China's manufacturing data
showed signs of robust growth. [O/R]
 The euro also rebounded to outperform all other G10
currencies after Washington showed readiness to back a bigger
EU stability fund and investors bet the European Central Bank
could step up its bond-buying program. [ID:nBRU011183]
 "The euro is basically embarrassing us all," said David
Watt, senior fixed income and currency strategist at RBC
Capital Markets.
 Apart from the euro, commodity currencies such as Canada's
shone, driven largely by the rise in oil prices to above $86 a
 The Canadian dollar CAD=D4 closed the North American
session at C$1.0170 to the U.S. dollar, or 98.33 U.S. cents, up
from Tuesday's close at C$1.0266 to the greenback, or 97.41
U.S. cents.
 "We are getting a relatively sizable bounce. What's going
on in equity markets, some of the easing of concerns about EU
periphery issues, that's all playing out and we've got the data
that came out of the U.S. today which was fairly solid," Watt
 "Our major trading partner is maybe on the road to recovery
once again and the cyclical backdrop might not be as fretful as
it was a month and half to two months ago."
 The currency's began the new trading month with a strong
advance, after recording a 0.6 percent retreat in November, its
first monthly drop in three months.
 Watt said the 200-day moving average of C$1.0289, tested on
Tuesday, still represented significant resistance for the U.S.
dollar against Canada's.
 Canadian government bonds tracked U.S. Treasuries lower as
appetite for riskier assets such as stocks drew investors away
from the relative safety of government debt.
 The two-year government of Canada bond CA2YT=RR was off
10 Canadian cents to yield 1.668 percent, while the 10-year
bond CA10YT=RR slipped 85 Canadian cents to yield 3.169
 In new issues, Canada's auction of 30-year real return
bonds met with weaker than usual demand, after investors pushed
up prices heading into the sale, making the issue less
attractive. [ID:nN01153360]
 Canada's data calendar is bare until Friday when the
November jobs report is published. It will be the last major
piece of data to consider before the Bank of Canada's next
interest rate decision on Dec. 7.
 The market is already pricing near-certainty that the
central bank will leave unchanged the target for the overnight
interest rate at 1 percent. BOCWATCH
 (Reporting by Claire Sibonney; editing by Rob Wilson)