CANADA FX DEBT-C$ surges higher, touches six-month high

Wed May 6, 2009 4:34pm EDT
 
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 * C$ closes at 85.78 U.S. cents
 * Rally follows upbeat domestic data
 * Bond prices lower as equities climb
 By Frank Pingue
 TORONTO, May 6 (Reuters) - The Canadian dollar shot to its
highest level in six months on Wednesday, tracking big gains on
equity markets, a surge in oil prices and upbeat domestic
data.
 Late in the session, the currency touched C$1.1653 to the
U.S. dollar, or 85.81 U.S. cents, which was its highest level
since Nov. 6 and put it 12 percent above the four-year low it
tumbled to in early March.
 Also helping to stir appetite for risk among investors were
reports that suggested some major U.S. banks won't have to
raise capital under government stress tests.
 "People are taking a look at the whole picture ... we are
commodity based and the world is going to need commodities, and
when things start to turn around on the economic front Canada
is in a great position to do well," said John Curran, senior
vice-president at CanadianForex, a commercial foreign exchange
dealing firm.
 "So it's all coming around and people are getting more
confident as time goes on, and the more good news we see the
more comfortable people are taking risk."
 The currency closed at C$1.1658 to the U.S. dollar, or
85.78 U.S. cents, up from C$1.1761 to the U.S. dollar, or 85.03
U.S. cents, at Tuesday's close.
 That left the currency well above its overnight low of
C$1.1826 to the U.S. dollar, or 84.56 U.S. cents.
 The Canadian dollar was given a boost early in the session
when data showed the value of building permits in Canada rose
by 23.5 percent in March from February, well above analyst
expectations, after after five months of declines.
[ID:nN06546133]
 The currency received another boost shortly after when the
Ivey Purchasing Managers Index rose in April, showing the
domestic economy is improving, after declining in the previous
month.
 Also lending support was a meaty 2.7 percent gain by the
Toronto Stock Exchange's main index and a rise in crude prices
to a five-month high.
 The next domestic data that will likely set the tone for
the Canadian dollar is Friday's jobs data, which is expected to
show the economy shed 50,000 jobs in April while unemployment
rose to 8.3 percent, according to a Reuters survey.
 BONDS PRICES LOWER
 Canadian bond prices ended lower across the curve as the
upbeat data from both sides of the border triggered a rally in
riskier assets like stocks and curbed appetite for more secure
assets like government debt.
 Alongside the upbeat domestic data was a U.S. report that
showed private employers cut fewer jobs than expected last
month, which boosted hopes the U.S. economy there has come
through the worst of the recession.
 But the move in bond prices was held in check ahead of the
release of Friday's Canadian and U.S. jobs data.
 The benchmark two-year Canadian government bond ended down
2 Canadian cents at C$100.45 to yield 1.029 percent, while the
10-year bond dropped 15 Canadian cents to C$105.85 to yield
3.070 percent.
 The 30-year bond slipped 80 Canadian cents to C$119.00 to
yield 3.883 percent.
 Canadian bonds were were relatively mixed compared to the
performance of their U.S. counterparts. The 10-year bond yield
was 8.6 basis points below the U.S. 10-year yield, compared
with 11.7 basis points below on Tuesday.