CANADA FX DEBT-C$ rises as commodities, stocks climb
* 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, assets.
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.
BOND PRICES TICK UP
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 percent.
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)
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