CANADA FX DEBT-C$ hits 6-week high on commodities, risk-taking

Tue Dec 1, 2009 12:45pm EST
 
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 * Canadian dollar gains more than 1 U.S. cent
 * Rises as high as C$1.0406/US$, or 96.10 U.S. cents
 * Higher oil, metal prices boost currency
 * Bonds mostly higher
 (Adds details)
 By Ka Yan Ng
 TORONTO, Dec 1 (Reuters) - The Canadian dollar reached a
six-week high against the U.S. currency on Tuesday as the price
of key commodities rose and investor thirst for risk climbed
along with global equities as worries over Dubai's debt waned.
 Jitters about Dubai's debt subsided after state
conglomerate Dubai World, the center of the debt storm, said
its planned restructuring of some units involved a lower than
expected $26 billion in debt.
 "Given that it's considerably lower than what the market
was expecting, we saw a nice rebound in terms of risk-seeking
behavior," said George Davis, chief technical analyst at RBC
Capital Markets.
 "With the (U.S.) dollar generally trading to the weaker
side of the ledger against all the major currencies, except the
yen, we've seen some continued downside follow-through down
towards the C$1.04 area," said Davis.
 The currency rose as high as C$1.0406 to the U.S. dollar,
or 96.10 U.S. cents, its highest level since Oct. 21, as global
stocks were sharply higher, and gold hit a record above $1,200
an ounce. The price of oil, a key Canadian export, was also
holding above $78 a barrel. [MKTS/GLOB] [GOL/] [O/R]
 An interest rate hike in Australia also sharpened risk
appetite.  [ID:nSYD393465]
 At 12:20 p.m. (1720 GMT), the Canadian dollar was at
C$1.0435 to the U.S. dollar, or 95.83 U.S cents, up from
C$1.0556 to the U.S. dollar, or 94.73 U.S. cents, on Monday.
 The move higher on Tuesday extends gains made in the
previous session after numbers showed Canada officially exited
recession. [ID:nN30349047]
 Although the currency is on a run higher, Canada is
unlikely to have to take special measures to curb the rise,
such as those taken on the yen by Japan, Finance Minister Jim
Flaherty said on Tuesday. [ID:N01499613]
 The Bank of Japan announced more measures to ease monetary
policy to help the ailing economy following an emergency
meeting, while holding interest rates at 0.1 percent.
[ID:nTKZ006325]
 BONDS TURN HIGHER
 Canadian bond prices were higher across most of the curve,
reversing early losses, as the U.S. manufacturing sector grew
for the fourth straight month in November, but at at a slower
pace.
 Data from the Institute for Supply Management reinforced
questions about the strength of the U.S. recovery, although
gains in U.S. stocks and signs of a stabilizing housing market
limited gains in debt markets. [ID:nN01398224]
 The two-year government bond CA2YT=RR was up 2 Canadian
cents at C$100.31 to yield 1.092 percent, while the 10-year
bond CA10YT=RR edged up 4 Canadian cents to C$104.29 to yield
3.222 percent. Only the 30-year bond was lower, down 20
Canadian cents at C$119.30 to yield 3.855 percent.
 (Editing by Rob Wilson)
 ((kayan.ng@thomsonreuters.com; Reuters Messaging:
kayan.ng.reuters.com@reuters.net; 416-941-8109))
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