CANADA FX DEBT-C$ resilient despite oil price's dip, risk

Tue Apr 5, 2011 8:44am EDT
 
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 * 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)