CANADA FX DEBT-C$ hits 10-mth high, backs off; bonds ease

Tue Aug 4, 2009 8:28am EDT
 
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 * Canadian dollar rises to 10-mth high
 * Bond prices ease as investors seek riskier assets
 TORONTO, Aug 4 (Reuters) - The Canadian dollar hit a fresh
10-month high versus the U.S. currency on Tuesday, supported by
positive risk sentiment, but backed off as commodity prices
softened.
 The rise was part of a general trend of U.S. dollar
weakness that saw greater gains in other currencies, such as
the Australian and New Zealand dollars, as well as sterling.
 Building on the near 8 percent gain in July, the Canadian
dollar rose as high as C$1.0632 to the U.S. dollar, or 94.06
U.S. cents, up 1.3 percent from Friday, before paring gains.
 The Canadian dollar backed off its highest since Oct. 2 as
commodity prices, particularly crude oil, softened and as
investors took profits on recent sharp gains in higher risk and
commodity-based currencies.
 The underlying positive sentiment, however, was still
intact. [ID:nL4454101]
 "Canada is actually not the highlighted currency. It's just
moving along with the general U.S. dollar selloff like just
about every other major," said Firas Askari, head of foreign
exchange trading at BMO Capital Markets.
 "This market is still highlighted by a real dearth in
liquidity."
 At 8 a.m. (1200 GMT), the Canadian dollar was at C$1.0701
to the U.S. dollar, or 93.45 U.S. cents, up from Friday's close
at C$1.0775 to the U.S. dollar, or 92.81 U.S. cents.
 Canadian markets were closed for the Civic Holiday on
Monday, when the Canadian dollar made the bulk of its sharp
move higher.
 Upbeat economic data and corporate earnings as well as
higher commodities prices have helped whet investor appetite
for riskier currencies, while bond prices have fallen.
 No Canadian data is due Tuesday, with the focus during
shortened week on domestic and U.S. jobs data on Friday for the
latest update on the economic recovery.
 Canadian bond prices were lower across the curve as
investors sought riskier assets as recovery hopes steam ahead.
 The two-year Canadian bond dipped 7 Canadian cents to
C$99.09 to yield 1.448 percent, while the 10-year bond lost 15
Canadian cents to C$102.20 to yield 3.483 percent.
 The 30-year bond fell 30 Canadian cents to C$117.20 to
yield 3.972 percent. In the United States, the 30-year Treasury
yielded 4.402 percent.
(Reporting by Ka Yan Ng; editing by Jeffrey Benkoe)