CANADA FX DEBT-C$ jumps to highest level in a year

Tue Oct 6, 2009 11:28am EDT
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 * Hits 94.66 U.S. cents, highest since Oct. 1, 2008
 * Lifted by higher commodity prices, equity markets
 * Australian rate hike also helps boost currency
 * Bonds lower across curve
 (Adds details, quote)
 By Jennifer Kwan
 TORONTO, Oct 6 (Reuters) - The Canadian dollar rose to its
highest level in a year against the U.S. currency on Tuesday
morning thanks to soaring commodity and equity prices and after
Australia's central bank raised its key cash rate.
 The Canadian currency touched a high of C$1.0564 to the
U.S. dollar, or 94.66 U.S. cents, its highest level since Oct.
1, 2008, on a string of factors set off by the Reserve Bank of
Australia's decision, making it the first of the Group of 20
central banks to raise interest rates as the global financial
crisis eases. [ID:nSYD520296]
 "We've had a perfect storm this morning for the Canadian
dollar," said Camilla Sutton, currency strategist at Scotia
 "If Australia is now viewing their market and the Asian
market as growth returning to trend, that's positive for
commodities. That, by default, would be positive for Canada."
 The rate hike set off speculation on which central bank may
raise rates next. Scotia Capital economists said the
possibility of Canada following sooner than expected is
"precisely nil" in their view.
 The Bank of Canada earlier this year chopped its benchmark
interest rate to a record low of 0.25 percent and pledged to
keep it there until at least the middle of 2010, assuming
inflation remains tame.
 The Canadian dollar's move higher was supported by soaring
commodity prices, with oil, a major Canadian export, rising
above $71 a barrel [O/R], while gold XAU= hit a record high
above $1,040 an ounce. [GOL/]. The currency's moves are often
influenced by prices for the two commodities.
 As well, higher stock markets, typically a gauge of
investors' willingness to take on risk, also supported the
 At 10:57 a.m. (1457 GMT), the currency was at C$1.0571 to
the U.S. dollar, or 94.60 U.S. cents, up from C$1.0701 to the
U.S. dollar, or 93.45 U.S. cents, at Monday's close.
 A strong reading from Canada's September Ivey Purchasing
Managers Index also helped boost investor sentiment, added
Sutton. [ID:nTAR001667]
 The next key technical level the market will be watching
for is C$1.0300 to the U.S. dollar, a mark not seen since last
September, she said. The currency hit C$1.0298 in September of
last year.
 Canadian bond prices were lower across the curve as money
flowed to higher-yielding equities. The market also following
the big U.S. Treasury market where debt prices eased as the
market braced for a $39 billion bond auction later in the day.
 The two-year CA2YT=RR bond was down 13 Canadian cents at
C$99.55 to yield 1.244 percent, while the 10-year bond
CA10YT=RR sank 43 Canadian cents to C$103.77 to yield 3.290
 The 30-year bond CA30YT=RR was down 65 Canadian cents at
C$119.60 to yield 3.842 percent. South of the border, the
30-year U.S. Treasury bond yielded 4.0534 percent.
 (Reporting by Jennifer Kwan; editing by Rob Wilson)