CANADA FX DEBT-C$ firms as home-sales data undermines US$

Tue Jun 2, 2009 10:18am EDT
 
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 * Canadian dollar at 92.46 U.S. cents
 * Bonds higher across the curve
 TORONTO, June 2 (Reuters) - The Canadian dollar was higher
versus the U.S. dollar on Tuesday morning as equity markets
headed higher and data showed U.S. pending home sales rose in
April.
U.S. pending home sales rose 6.7 percent, spurring the U.S.
dollar to extend losses due to rising risk appetite.
 At 10:05 a.m. (1405 GMT),the Canadian dollar was at
C$1.0815 to the U.S. dollar, or 92.46 U.S. cents, up from
C$1.0910 to the U.S. dollar, or 91.66 U.S. cents, at Monday's
close.
 "Finding direction, the Canadian dollar will now very much
focus on what is happening outside the border, ie with risk
sentiment and the U.S. dollar," said Matthew Strauss, senior
currency strategist at RBC Capital Markets.
 The Canadian currency slipped overnight to as low as
C$1.0973 to the U.S. dollar, or 91.13 U.S. cents, as the U.S.
currency attempted a recovery, but the greenback's move ran out
of steam.
 Oil, a key Canadian export and often a factor that drives
the currency, held near $68 a barrel after touching a
seven-month high the previous day on a rally in equities.
[ID:nSIN357259]
 The main risk to the currency this week remains the Bank of
Canada interest-rate announcement on Thursday. Market players
will look for the central bank's outlook on the economy and the
recent strength of the currency.
 The central bank is expected to keep interest rates
unchanged at 0.25 percent, in line with its conditional
commitment to keep interest rates low until middle of 2010.
 BONDS FIRM
 Canadian bond prices edged higher across the curve.
 The benchmark two-year government bond was up 5 Canadian
cents at C$100.02 to yield 1.240 percent, while the 10-year
bond gained 25 Canadian cents to C$102.65 to yield 3.434
percent.
 The 30-year bond rose 40 Canadian cents to C$116.35 to
yield 4.021 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)