CANADA FX DEBT-C$ resilient despite oil price's dip, risk
* C$ rises to C$0.9653, or $1.0359
* Bond prices mixed
* C$ bucks risk aversion trend
* C$ range seen between C$0.9600 and 0.9750
By Solarina Ho
TORONTO, April 5 (Reuters) - The Canadian dollar demonstrated resiliency as the currency firmed against its U.S. counterpart on Tuesday despite slightly weaker oil prices and some risk aversion overnight.
The euro eased off five-month highs, hit by a Portugal ratings downgrade and a rise in Chinese interest rates.
The China move also hit the Australian dollar, Canada's commodity-linked sister currency. China is a key trading partner for Australia, which saw its currency slip further away from Monday's 29-year high. [FRX/] [ID:nBJD000260]
"(China's rate hike) was a little bit earlier than the market expected. Aussie sold off quite a bit, but Canada hasn't followed suit. It's a little surprising," said Steve Butler, director of foreign exchange trading at Scotia Capital.
"You'd think with the little bit of risk aversion that we've seen overnight that Canada might be a little bit weaker ... I guess it goes to show the resiliency in the currency and the fact that there are still eager buyers in the Canadian dollar every time we see a dip."
At 8 a.m. (1200 GMT), the currency CAD=D4 stood at C$0.9653 to the U.S. dollar, or $1.0359, up from Monday's North American finish of C$0.9675 to the U.S. dollar, or $1.0336.
The currency hit a session low of C$0.9648 to the U.S. dollar, or 1.0465, but was off Monday's three-year high of C$0.9616, or 1.0400.
Oil prices dipped but held near 2-1/2 year highs, with Brent crude close to $121 a barrel on turmoil in the oil-exporting regions of the Middle East and Africa. Oil is a key export for Canada, and prices often influence moves in the commodity-linked Canadian dollar. [O/R]
With little data on Tuesday to drive further direction, the currency was expected to take its cues from the equity markets.
Butler expected to see resistance around the C$0.9600 level, with markets booking some profits in that range. Support was expected around the C$0.9740 to 0.9750 range going into Friday's employment report for Canada, the next key economic data holding the market's attention.
The Federal Open Market Committee's (FOMC) minutes later on Tuesday and Thursday's expected rate hike by the European Central Bank could provide further movement.
Canadian government bond prices were mostly unchanged or higher, with Portugal's downgrade sparking some safe-haven bids.
A slew of contrasting comments by U.S. Federal Reserve officials recently, including Fed Chairman Ben Bernanke on Monday, also had the markets parsing what it will mean for the central bank's policy outlook. [ID:nN04294041]
The two-year bond CA2YT=RR was up 1 Canadian cent to yield 1.805 percent, while the 10-year bond CA10YT=RR was unchanged, yielding 3.359 percent.
(Editing by Kenneth Barry)
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