CANADA FX DEBT-C$ hits two-week high on growing risk appetite

Wed Feb 2, 2011 8:11am EST
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 * 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