CANADA FX DEBT-C$ climbs as appetite for risk returns

Thu Apr 2, 2009 11:04am EDT
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 * C$ hits 80.35 U.S. cents
 * Oil climbs to above $51, stocks rally
 * Bonds lower across the curve
 (Adds details, quote)
 By Jennifer Kwan
 TORONTO, April 2 (Reuters) - The Canadian dollar CAD=
gained against the greenback on Thursday as oil prices and
equity markets were buoyed by growing optimism the global
economy may be on the road to recovery.
 Market watchers credited sturdier economic data out of the
United States, including healthier factory activity and pending
sales of existing homes, as well as better than expected auto
sales numbers.
 "The pace of contraction appears to be lessening," said
said Andrew Pyle, wealth advisor Scotia McLeod.
 "I think that's where the optimism is springing from. It's
not necessarily that we're out of the woods, but we can see the
edge of the woods now."
 At 10:37 a.m. (1437 GMT), the Canadian dollar was at
C$1.2469 to the U.S. dollar, or 80.20 U.S. cents, and at one
point touching a high of 80.35 U.S. cents.
 That was up from Wednesday's close of C$1.2610 to the U.S.
dollar, or 79.30 U.S. cents.
 The price of oil CLc1, a key Canadian export, rose more
than $3 to above $51 a barrel on Thursday, helped by rising
equities and as investors hoped G20 leaders would deliver
concerted measures to restore global growth. [ID:nT180356]
 "There's less risk aversion. We're seeing money getting
pulled out of safe haven U.S. treasuries and U.S. dollar, and
flowing into equity markets and other currencies such as the
Canadian dollar," said Sal Guatieri, senior economist at BMO
Capital Markets.
 The U.S. dollar was further pressured by the European
Central Bank's decision to cut its main interest rate by a
smaller than expected 25 basis points, said Matthew Strauss,
senior currency strategist at RBC Capital Markets.
 Looking ahead, markets will be firmly focused on U.S. jobs
figures due on Friday, and on the G20 summit in London.
 Canadian government bond prices were lower across the curve
as as upbeat investors shifted money out of safe havens and
into riskier equity markets.
 "The bond prices are lower mainly because the equity
markets are doing so well," said Pyle. "We're seeing a shift in
assets from safe havens like gold gold and bonds into stocks."
 The two-year bond fell 8 Canadian cent to C$100.31 to yield
1.106 percent. The 10-year bond dropped 25 Canadian cents to
C$108.35 to yield 2.798 percent.
 The 30-year bond pulled back 15 Canadian cents to C$125.50
to yield 3.559 percent. The U.S. 30-year bond yielded 3.5262
 (Reporting by Jennifer Kwan; editing by Rob Wilson)