CANADA FX DEBT-C$ rallies on risk appetite, strong equities

Mon Jun 1, 2009 8:05am EDT
 
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 TORONTO, June 1 (Reuters) - Canada's currency shot higher
versus the U.S. dollar on Monday, boosted by risk appetite, but
fell back slightly ahead of domestic data that is expected to
show Canada experienced the biggest economic contraction on
record in the first quarter.
 Data due at 8:30 a.m. (1230 GMT) will likely show GDP
shrank 6.6 percent, annualized, in the January to March period,
according to a median forecast by analysts in a Reuters poll.
[ID:nN28322505] [ID:nN25451156]
 The Canadian dollar rallied overnight to hit C$1.0784 to
the U.S. dollar, or 92.73 U.S. cents, extending its climb since
falling to a four-year low in early March.
 At 7:40 a.m., the unit was at C$1.0837 to the U.S. dollar,
or 92.28 U.S. cents, up from Friday's session close of C$1.0917
to the U.S. dollar, or 91.60 U.S. cents
 "What we're seeing is a very positive start to the week for
risky assets," Matthew Strauss, senior currency strategist, RBC
Capital Markets. "Two factors behind it are a very strong
return to riskier asset classes and broad-based U.S. dollar
selling."
 Strauss said the Canadian dollar fell back a bit ahead of
the Canadian gross domestic product data, but the retreat is
more likely due to a pause after a strong rally overnight.
 "We had some very aggressive moves overnight and we have
some stock taking as North America opens," he said.
 World stocks and oil rallied to fresh 2009 highs on Monday
after signs of improvement in global factory activity added to
optimism the global economy may be on the road to recovery.
[MKTS/GLOB] U.S. stock index futures pointed to a higher open.
[ID:nN01437106]
 The Canadian dollar has steadily climbed above its March
low, a move credited to a combination of higher prices
for key Canadian commodities, some upbeat economic data and
lower demand for the U.S. dollar.
 In May, the unit rallied 9.3 percent, its biggest monthly
gain since at least October 1950, according to Bank of
Canada data that dates back to 1950.
 Canadian bond prices were mostly lower across the curve,
following U.S. Treasuries, which fell in Europe as gains in
equities dented the appeal of government debt. [ID:nL1471444]
 (Reporting by Jennifer Kwan; Editing by Theodore d'Afflisio)