CANADA FX DEBT-C$ rises as commodities, stocks climb

Mon Oct 5, 2009 4:49pm EDT
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 * C$ rises to finish at 93.45 U.S. cents
 * Move driven by higher commodities, stocks
 * Bond prices firm
 By Jennifer Kwan
 TORONTO, Oct 5 (Reuters) - Canada's dollar rose against the
U.S. dollar on Monday, lifted by higher commodity and equity
prices as investors hunted for higher-yielding, albeit riskier,
 The currency maintained the overnight lift it got from the
weekend Group of Seven meeting, which reaffirmed the market's
view that policymakers are comfortable with a gradually
weakening greenback.
 The G7 finance ministers and central bankers, who met in
Istanbul, also said too much foreign exchange volatility tends
to threaten economic stability. [FRX/] [ID:nL3421338]
 Analysts said the statements left the U.S. dollar open to
further weakness, opening the door for the Canadian dollar and
a number of currencies to rise against the greenback.
 As the North American session wore on rising commodity and
equity prices took hold as the dominant drivers of the Canadian
currency, said Matthew Strauss, senior currency strategist at
RBC Capital Markets.
 "One could've argued that movements during the Asia trading
and European trading more specifically had more to do with the
G7 statement," Strauss said.
 "The movement late this morning and this afternoon in North
America has more to do with the return of risk appetite."
 The Canadian unit finished at C$1.0701 to the U.S. dollar,
or 93.45 U.S. cents, up from C$1.0825 to the U.S. dollar, or
92.38 U.S. cents, at Friday's close.
 North American stock markets finished higher as commodities
rose. Stocks also got a lift after a broker issued a bullish
call on big banks and as U.S. data showed the services sector
expanded for the first time since August 2008. [.N] [.TO]
 Oil prices climbed above $70 a barrel on the U.S. economic
data [O/R]. Canada is a key exporter of oil and its currency is
often influenced by prices for the commodity.
 The Canadian dollar's performance will likely continue to
be driven by events outside of Canada until later in the week
when domestic housing starts data is released on Thursday. The
key report for the week, however, is Friday's release of
September jobs data.
 Canadian bond prices were a touch firmer across the curve,
as the trend toward higher-risk assets may have caused
investors to shift money out of U.S. Treasuries and into
Canadian government bonds and currency, said Michael Gregory,
senior economist at BMO Capital Markets.
 The two-year CA2YT=RR Canada bond was up 3 Canadian cents
at C$99.67 to yield 1.179 percent, while the 10-year bond
CA10YT=RR rose 15 Canadian cents to C$104.15 to yield 3.245
 The 30-year bond CA30YT=RR was up 35 Canadian cents at
C$120.25 to yield 3.804 percent. In the United States, the
30-year Treasury yielded 4.0141 percent.
 Canadian bonds mostly outperformed U.S. Treasuries across
the curve.
 (Editing by Peter Galloway)