CANADA FX DEBT-C$ jumps to 3 week-high in risk rally

Thu Dec 2, 2010 1:08pm EST
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 * C$ jumps to 99.70 U.S. cents
 * Bonds little changed
 (Updates to afternoon)
 By Claire Sibonney
 TORONTO, Dec 2 (Reuters) - The Canadian dollar rose more
than a penny against its U.S. counterpart on Thursday, hitting
a near three-week peak on the back of a broad risk rally.  
 The Canadian dollar CAD=D4 hit a session high of C$1.0030
against the greenback, or 99.70 U.S. cents, its highest level
since Nov. 12.
 With no Canadian economic data on tap, the move was largely
driven by global markets as stocks and commodity prices gained,
due in part to upbeat U.S. housing and retail data.
 The euro rebounded against the U.S. dollar as well on
further evidence of economic recovery in Europe and the United
States. Traders also cited European Central Bank buying of
Portuguese and Irish bonds.
 The Canadian dollar, however, was the day's best performer
among G10 currencies.
 "It's unusually strong ... it's very much a flow-driven
story," said Sacha Tihayni, currency strategist at Scotia
 "Everything is going in the same direction today against
the U.S. dollar so that provides the pretext for Canadian
dollar strength. Commodities are up, equities are roaring
 At 12:46 p.m. (1738 GMT), the Canadian dollar CAD=D4 was
at C$1.038 to the U.S. dollar, or 99.62 U.S. cents, up sharply
from C$1.0170 to the U.S. dollar, or 98.33 U.S. cents, at
Wednesday's close.
 The Canadian dollar is expected to be fairly rangebound and
remain close to current levels around parity with the U.S.
dollar over the next 12 months, according to a Reuters poll
released on Thursday. [ID:nN02224928]
 Tihanyi said parity represented a significant support level
for the U.S. dollar on Thursday.
 Next in focus, Friday's release of the Canadian November
jobs reports will be the last major piece of data to consider
before the Bank of Canada's next interest rate decision on Dec.
7. The U.S. jobs report is also on tap on Friday.
 In another poll released on Thursday, primary dealers and
global forecasters surveyed by Reuters said unanimously they
expected the Bank of Canada to keep interest rates on hold next
week, but the uneven economic recovery left them divided on the
timing of rate hikes in 2011. [ID:nN02264459]
 Canadian government bond prices cut some losses as U.S.
Treasuries turned positive after comments from Jean-Claude
Trichet failed to meet hopes that the European Central Bank
will take aggressive action to stabilize euro-zone activity.
 The two-year government of Canada bond CA2YT=RR was flat
to yield 1.677 percent, while the 10-year bond CA10YT=RR was
down 22 Canadian cents to yield 3.04 percent.
 (Reporting by Ka Yan Ng and Claire Sibonney; editing by Peter