CANADA FX DEBT-C$ eases after hitting 3-year high

Mon Apr 4, 2011 10:16am EDT
 
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 * C$ falls back to C$0.9667, or $1.0344
 * Hit 3-year high of C$0.9616, or $1.0400, in early trade
 * Bond prices mixed
 By Solarina Ho
 TORONTO, April 4 (Reuters) - The Canadian dollar was lower
against the U.S. dollar on Monday morning, after hitting a
three-year high in early trade, as oil prices eased off highs
and as the greenback strengthened on short-covering.
 The Canadian dollar hit as high as C$0.9616 to the U.S.
dollar, or $1.0400, before easing back below Friday's close.
 At 9:31 a.m. (1331 GMT), the currency CAD=D4 was at
C$0.9667 to the U.S. dollar, or $1.0344, down from Friday's
North American finish of C$0.9644 to the U.S. dollar, or
$1.0369.
 "The market is taking back some (U.S.) dollar short-sell
... the Canadian dollar is slightly weaker along with other
commodities, high-beta currencies, with the euro flat and
having difficulty in getting through technical resistance,"
said Jack Spitz, managing director of foreign exchange at
National Bank Financial Group.
 The euro fell from a five-month peak against the U.S.
dollar as investors priced in expectations of an increase in
euro zone interest rates. [FRX/]
 Selling in the Australian dollar, a commodities-linked
sister currency to the Canadian dollar, inspired some
short-dollar-covering as well, Spitz said. "Look for Aussie to
be a price-directional provider for USD/CAD."
  "The primary factor is still the broader commodity price
movement," said Mark Chandler, head of Canadian fixed income
and currency strategy at RBC Capital Markets.
 The high of C$0.9616 was the Canadian dollar's highest
level since November 2007, when it touched C$0.9059, or
$1.1039.
 Merger and acquisition activity may help buoy the Canadian
currency. Minmetals Resources 1208.HK, China's biggest metals
trading firm, has offered $6.5 billion to buy Canadian-listed
Equinox Minerals EQN.TO.
 Canadian bond prices were mixed across the curve, with
two-year bond prices higher. South of the border, Chandler
noted some support for shorter-dated bonds as well, in part due
to hawkish comments from William Dudley, one of the Federal
Reserve's most powerful policymakers. [US/]
 The two-year bond CA2YT=RR was up 1.5 Canadian cents to
yield 1.824 percent, while the 10-year bond CA10YT=RR lost 2
Canadian cents to yield 3.370 percent.
 (Reporting by Solarina Ho; editing by Peter Galloway)