CANADA FX DEBT-C$ closes higher on resources, risk-taking

Tue Dec 1, 2009 4:42pm EST
 
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 * C$ ends up at 95.54 U.S cents
 * Hits 6-week high above 96 U.S. cents
 * Rising resources, stocks, Aussie rate hike whet appetite
 * Large corporate debt deals abound
 (Adds details)
 By Ka Yan Ng
 TORONTO, Dec 1 (Reuters) - The Canadian dollar pushed
higher again on Tuesday, getting a boost from record gold and
stronger oil prices, and on a renewed appetite for risk after
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
equities climbed steeply as Dubai worries eased, and gold hit a
record above $1,200 an ounce. The price of oil, a key Canadian
export, was also higher, holding above $78 a barrel.
[MKTS/GLOB] [GOL/] [O/R]
 An interest rate hike in Australia also sharpened risk
appetite.  [ID:nSYD393465]
 The Canadian dollar finished at C$1.0467 to the U.S.
dollar, or 95.54 U.S cents, up from C$1.0556 to the U.S.
dollar, or 94.73 U.S. cents, on Monday.
 The move higher extended gains made on Monday after numbers
showed Canada officially exited recession. [ID:nN30349047]
 Although the currency is on another run higher, Ottawa 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 FALL
 The renewed risk appetite pushed up stocks and took
attention away from the relative safety of Canadian government
bonds, while several large debt issues were also absorbed.
 Dec. 1, and the period around it, tends to be a time when
investors are a bit more flush with cash because of maturing
government bonds and coupon payments.
 Big debt issuers on Tuesday included C$500 million from
Caisse Centrale Desjardins and C$1 billion from Telus Corp, and
the market was expected to see more deals in coming weeks
before holidays thin out liquidity. [CAN-ISU]
 "Just chalk it down to a heavy calendar of new issuance,"
said Sheldon Dong, fixed income analyst at TD Waterhouse
Private Investment.
 "Any issuer that needs to borrow money is probably going to
come to market soon. We also had a fairly large Dec. 1 coupon
payment that probably needs to be reinvested so investors are
looking for a place to place money."
 Data on Tuesday was a mixed bag as the U.S. manufacturing
sector grew for a fourth straight month in November, but at a
slower than expected pace, while further signs emerged of a
stabilizing U.S. housing market. [ID:nN01398224]
 The two-year government bond CA2YT=RR dipped 1 Canadian
cent to C$100.29 to yield 1.103 percent, while the 10-year bond
CA10YT=RR fell 28 Canadian cents to C$103.97 to yield 3.259
percent.
 ((kayan.ng@thomsonreuters.com; Reuters Messaging:
kayan.ng.reuters.com@reuters.net; 416-941-8109))
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