CANADA FX DEBT-C$ rises in GDP data afterglow, bond yields up

Mon Mar 1, 2010 5:09pm EST
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* C$ jumps more than 1 U.S. cent to 96.06 cents

* Bond yields rise as rate hike expectations edge up

* Canada economy roars back to life in Q4

* Bank of Canada rate announcement on Tuesday in focus

By Ka Yan Ng

TORONTO, March 1 (Reuters) - Canada's currency soared against the U.S. dollar on Monday, while government bonds fell after data showed Canada's fourth-quarter economic growth beat estimates, raising the possibility that the Bank of Canada could raise interest rates sooner than it had planned.

The better-than-expected data lit a fire under the Canadian dollar, lifting it to its highest level in almost a week as investors deliberated whether the Bank of Canada would back away from its conditional pledge to keep rates at their current record low level until the end of the second quarter.

The Canadian dollar closed at C$1.0416 to the U.S. dollar, or 96.06 U.S. cents, up from Friday's close at C$1.0525 to the U.S. dollar, or 95.01 U.S. cents. Its session high was C$1.0410 to the greenback, or 96.06 U.S. cents.

"It's a real bellwether day for the Canadian dollar," said Eric Lascelles, chief economics and rates strategist at TD Securities.   Continued...