CANADA FX DEBT-C$ rises on oil, risk appetite; bonds drop

Wed Mar 4, 2009 10:51am EST
 
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* Rebounds from overnight weakness

* Analysts still see downward pressure

* Bonds weaken broadly with equity rally

TORONTO, March 4 (Reuters) - The Canadian dollar climbed against the U.S. currency on Wednesday as risk appetite returned and oil prices rose.

The currency weakened overnight to as low as C$1.2968 to the U.S. dollar, or 77.11 U.S. cents, but gradually recovered on the prospect of more stimulus spending by China and firmer oil prices.

A senior Chinese economic planning official said China would increase spending in areas such as manufacturing and infrastructure, on top of the 4 trillion yuan ($585 billion) stimulus package unveiled in November. [ID:nBJC000263]

At 10:20 a.m. (1520 GMT), the Canadian dollar CAD= was at C$1.2850 to the U.S. dollar, or 77.82 U.S. cents, up from C$1.2911 to the U.S. dollar, or 77.45 U.S. cents, at Tuesday's close.

"The directional bias in currencies, including Canada, has been led by a better bid to global risk," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

The Canadian dollar, which has also been heavily influenced by movements on stock markets recently, found support from a global rally by equities.   Continued...