CANADA FX DEBT-C$ helped higher by late U.S. stocks rally

Mon Jul 6, 2009 5:09pm EDT
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* Canadian dollar rises to 86.27 U.S. cents at close

* Late U.S. stocks rally aids C$; TSX ends sharply lower

* Bond prices mixed; long end pressured by supply concerns (Adds details, quotes)

By Jennifer Kwan

TORONTO, July 6 (Reuters) - A late-day rally in U.S. equities helped the Canadian dollar close higher against the U.S. currency on Monday after it traded weaker for most of the session.

U.S. stocks bounced higher just before the close as concerns about the strength and timing of an economic recovery kept pressure on commodity prices, but helped to lift stocks considered to be defensive plays. [ID:nN06280952]

Higher equity markets are typically seen as a sign of investor willingness to take risk, and as such are generally seen as favorable for currencies such as the Canadian dollar that are perceived to be riskier than the greenback.

"We saw a nice pop higher in U.S. stocks and that basically caused the U.S. dollar to weaken across the board," George Davis, chief technical strategist at RBC Capital Markets.

The Canadian currency peaked at C$1.1588 to the U.S. dollar and fell as low as C$1.1680, its lowest level in seven weeks.   Continued...