CANADA FX DEBT-C$ rebounds from lows after Germany data

Mon Jun 7, 2010 9:45am EDT
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 * C$ rises to C$1.0556 after touching C$1.0680
 * Currency outperforming other commodity-based currencies
 * Flaherty urges EU countries to fix their finances
 * Noyer says short-term outlook favorable
 * Bond prices lower
 By John McCrank
 TORONTO, June 7 (Reuters) - The Canadian dollar firmed on
Monday, clawing its way back from its lowest point in more than
a week overnight as concerns about the health of the European
economy were soothed by some solid economic data out of
 The currency rebounded along with U.S. stock indexes after
the German data. Earlier it had fallen to C$1.0680 to the U.S.
dollar, or 93.63 U.S. cents, during the European and Asian
trading sessions due as investors worried that the global
economic recovery might be in jeopardy
 At 9:10 a.m., the Canadian dollar was at C$1.0556 to the
U.S. dollar, or 94.73 U.S. cents. At the end of Friday's North
American session, it was at C$1.0607 to the U.S. dollar, or
94.28 U.S. cents.
 The currency fell sharply on Friday on a weak U.S. jobs
report and on comments out of Hungary that its finances were
worse that previously thought, ratcheting up concerns about the
European sovereign debt situation.
 "On the back of that we continued to see risk aversion
overnight in European and Asian trading and the U.S. dollar
broadly gaining against most G10 currencies," said Matthew
Strauss, senior currency strategist at RBC Capital Markets.
 "Then as we got closer to the North American markets open,
we saw North American equity futures moving from slightly
negative to slightly positive, and that's just helped the
Canadian dollar."
 German industrial orders came in well above expectations in
April, adding to signs that Europe's largest economy was on the
path to durable growth. [ID:nLDE656107]
 That helped soften the risk aversion in the markets.
 "Overall, we are actually doing pretty well," said Strauss,
who said the Canadian dollar was outperforming other
commodity-based currencies. "The early weakness that we saw
overnight that took us toward 1.07, was just part of risk
aversion. It's basically flat now because the risk aversion is
dissipating for the time being."
 Commodities, like oil, natural gas, and metals, make up a
big chunk of Canada's exports and when the health of the global
economy is in doubt, risk aversion goes up and the Canadian
dollar suffers as demand for Canada's exports is seen
 U.S. crude prices CLc1 were hovering about$71
 Looking forward, there are no major Canadian data releases
this week. In the United States, market players will be
watching the U.S. retail sales numbers on Friday for more
insight into the health of the world's No. 1 economy.
 Otherwise, the events in Europe will likely continue to be
the dominant driver of currency moves, said Strauss.
 Elsewhere, Minister of Finance Jim Flaherty delivered
speech at the International Corporate Governance Network's
annual global summit in Toronto on Monday, where he urged EU
countries to fix their finances. [ID:nTOR007552]
 Also, Bank of Canada Governor Mark Carney was moderating a
dialogue with Christian Noyer, Governor of the Banque de
France, at the International Economic Forum of the
Americas/Conference of Montreal. Noyer said the short-term
outlook was favorable. [ID:nWEN5556]
 Carney is also scheduled to speak on Thursday at the
International Organization of Securities Commissions Annual
Conference in Montreal.
 Bond prices were weaker across the board on Monday.
 The two-year Canadian government bond CA2YT=RR was down 8
Canadian cents to yield 1.660 percent, while the 10-year bond
CA10YT=RR fell 42 Canadian cents to yield 3.340 percent.
 (Reporting by John McCrank; Editing by Theodore d'Afflisio)