CANADA FX DEBT-C$ touches four-month high, bonds weaken

Mon May 4, 2009 10:43am EDT
 
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 * C$ at 84.95 U.S. cents
 * Oil, gold prices higher
 * Bonds mostly weaker across curve
 (Adds details, quote)
 TORONTO, May 4 (Reuters) - The Canadian dollar jumped to a
four-month high against the greenback on Monday as equity
markets soared and oil prices rose on growing optimism the
global economy may be on the road to stabilizing.
 The Canadian dollar rallied as high as C$1.1763 to the U.S.
dollar, or 85.00 U.S. cents, its highest level since Jan. 6, as
crude, a key Canadian export, pushed above $53 a barrel.
 The currency traded in tandem with equity and commodity
markets, in line with a recent theme of risk appetite that has
seen investors willing to take on a bit more risk on the hope
that the global economy is getting healthier.
 "The market is really trading on the idea that the
recession looks a little bit less terrible than it did a couple
of weeks ago," said Charmaine Buskas, senior economics
strategist, TD Securities.
 "We're also seeing an improvement in risk appetite which
means that investors are dipping their toes back into Canadian
dollar markets."
 At 10:15 a.m. (1415 GMT), the Canadian dollar was at
C$1.1772 to the U.S. dollar, or 84.95 U.S. cents, up from
C$1.1859 to the U.S. dollar, or 84.32 U.S. cents, at Friday's
close.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE rose more than 2 percent on Monday morning as
resource-issues were lifted by commodity prices. Financials
gained on hope that stress tests on the biggest U.S. banks will
provide some clues on the depth of the problems in the U.S.
financials sector.
 Meanwhile, markets in Britain and Japan were closed for
holidays, and made swings in the currency exaggerated at
times.
 "Even given the whippiness, we're sputtering around the
200-day moving average for dollar/Cad. You're getting the
markets debate between: are we in a position where we need to
blow definitively through the 200-day or is it time to take
some money off the table," said David Watt, senior currency
strategist at RBC Capital Markets.
 No Canadian economic data was due on Monday, but markets
will be watching for employment data, the Ivey Purchasing
Managers' Index, and housing reports later this week.
 BONDS FLAT TO LOWER
 Canadian bonds were flat to slightly weaker across the
curve as money flowed to equity markets on the renewed risk
appetite, denting the appeal of government debt.
 "We're seeing a little bit of a selloff simply as risk
appetite improves," said Buskas.
 As well, large debt issues in the United States and Canada
are expected this week, which often weight on prices.
 The two-year Canada bond ticked down 2 Canadian cents to
C$100.52 to yield 0.995 percent, while the 10-year edged fell
60 Canadian cents to C$104.95 to yield 3.172 percent.
 The 30-year bond sank C$1.05 to C$110.70 to yield 3.898
percent. In the United States, the 30-year treasury yielded
4.1067 percent.
 (Reporting by Jennifer Kwan and Ka Yan Ng;editing by Rob
Wilson)