CANADA FX DEBT-C$ rises for third day, short bonds fall

Tue Mar 2, 2010 4:55pm EST
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* C$ ends up at 96.48 U.S. cents, off 6-week high

* Short-term bonds hold lower, lag U.S. Treasuries

* Bank of Canada holds rates, sees no early hike (Adds details)

By Ka Yan Ng

TORONTO, March 2 (Reuters) - Canada's currency jumped against the U.S. dollar on Tuesday after the Bank of Canada left interest rates unchanged, but it finished off the six-week high it hit earlier in the day, while short-term bonds held lower.

The Canadian dollar rose to C$1.0309 to the U.S. dollar, or 97 U.S. cents, a six-week high, soon after the central bank rate decision as market players detected what they interpreted as a shift to a slightly more hawkish tone in the bank's statement.

The currency pared those gains slowly throughout the day but still ended higher for a third straight session as firm oil prices, hope of resolution to Greece's debt problems, and gains on equity markets lent support.

Monday's stronger-than-expected economic growth data continued to play a supporting role as well.

"It's been three days in a row now of basically one-way traffic," said Steve Butler, director of foreign exchange trading at Scotia Capital. "It rebuffed (the C$1.03 level) today I think just partly because we're suffering a little bit of fatigue. We've bounced a little bit for now."   Continued...