CANADA FX DEBT-C$ hits two-week high on growing risk appetite
* C$ jumps to $1.0116
* Bonds flat to higher
* Trading may be affected by bad weather in U.S., Canada
By Ka Yan Ng
TORONTO, Feb 2 (Reuters) - The Canadian dollar firmed to its highest level against the U.S. dollar in two weeks on Wednesday, helped by strong data suggesting a global economic recovery that is gaining traction and easing fears about turmoil in Egypt.
Riskier assets were in favor again on Wednesday, as optimism rallied around the recovery-inspiring data of the week so far that has seen a positive assessment about the global economy from purchasing managers. [MKTS/GLOB]
"Prospects are improving on global growth. The high oil prices and soft U.S. dollar have helped the Canadian dollar," said Michael O'Neill, managing director, at Knightsbridge Foreign Exchange.
"For the second time we rejected weakness above C$1.0040 and it reversed itself quickly. The fact that we got below C$0.9910 again shifts the focus on further Canada gains."
At 7:55 a.m. (1255 GMT), the Canadian currency CAD=D4 was at C$0.9885 to the U.S. dollar, or $1.0116, up from C$0.9909 to the U.S. dollar, or $1.009, at Tuesday's close.
Just before the North American session got underway, it had climbed as high as C$0.9868 to the U.S. dollar, or $1.0134, the firmest since Jan. 18.
O'Neill said trading volumes might be slower and lighter than usual on Wednesday because much of the United States has been hit by bad weather as has southern Ontario, which could keep some trading desks thinly-staffed.
Later in the session, market players will monitor a second speech this week by Bank of Canada Senior Deputy Governor Tiff Macklem, who will speak in Alberta about Canadian productivity. It is largely expected to be a repeat of his speech on Monday where he urged corporate Canada to invest and lower costs to stay competitive. [ID:nN27191953]
Canadian bond prices were flat to higher across the curve, in line with the U.S. Treasury market, ahead of fresh U.S. labor data.
The privately-collected U.S. ADP employment report was seen showing a gain of 145,000 jobs after last month's rise of 297,000. No Canadian data is due on Wednesday.
Also on tap later in the session, the Bank of Canada is set to sell C$3 billion in 10-year bonds on Wednesday.
The two-year bond CA2YT=RR was up 1 Canadian cent to yield 1.708 percent, while the 10-year bond CA10YT=RR rose 14 Canadian cents to yield 3.334 percent.
(Reporting by Ka Yan Ng, Editing by Chizu Nomiyama )
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