CANADA FX DEBT-C$ rallies on continued risk appetite

Wed Feb 4, 2009 10:45am EST
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* C$ rises 1.7 percent off low near 80 U.S. cents

* Ongoing appetite for risk cited for C$ rally

* Bond prices down as North American equities jump (Recasts)

By Frank Pingue

TORONTO, Feb 4 (Reuters) - The Canadian dollar was higher versus the U.S. dollar on Wednesday morning as traders felt comfortable taking on riskier assets following a choppy overnight session that saw big swings in the currency.

A rally in equities and U.S. data that came in better than expected paved the way for the Canadian currency to move higher, but market analysts were not predicting the start of a renewed rally in the Canadian dollar, which remains down about 0.45 percent in 2009.

"I think the overall market remains bearish and the outlook for both the U.S. and global economy remains highly uncertain," said Matthew Strauss, senior economist at RBC Capital Markets. "And I think any period of risk appetite in this environment will we relatively shallow and short-lived."

At 10:20 a.m. (1520 GMT), the Canadian unit was at C$1.2235 to the U.S. dollar, or 81.73 U.S. cents, up from C$1.2301 to the U.S. dollar, or 81.29 U.S. cents, at Tuesday's close.

That was 1.7 percent above a low reached about two hours earlier.   Continued...