CANADA FX DEBT-C$ hits July high on data, rallying oil, stocks

Thu Jul 8, 2010 9:53am EDT
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 * C$ higher at 96.22 U.S. cents
 * U.S. weekly jobless data aids C$ higher
 * Risk appetite pushes bonds lower across curve
 (Adds details, quote)
 By Jennifer Kwan
 TORONTO, July 8 (Reuters) - The Canadian dollar climbed
against the greenback on Thursday after data showed a sharp
drop in U.S. weekly jobless claims, easing concerns about the
economic health of Canada's largest export market.
 The Canadian dollar CAD=D4 touched a session high of
C$1.0379 to the U.S. dollar, or 96.35 U.S. cents, its strongest
level since June 29, following the data.
 U.S. government data showed initial claims for state
unemployment benefits dropped 21,000 to a seasonally adjusted
454,000 in the week ended July 3, the lowest level since early
May. Analysts polled by Reuters had expected claims to fall to
460,000. [ID:nN07157763]
 "The headline data implies a slightly better outlook for
the U.S. economy," said Shaun Osborne, chief currency
strategist at TD Securities.
 Osborne also cited a broader risk rally supported by robust
global equity markets as a key factor boosting the currency.
 "The Canadian dollar is still benefiting from the slightly
better risk environment that we're seeing at the moment," he
 At 9:48 a.m. (1348 GMT), the Canadian dollar CAD=D4 was
at C$1.0393 to the U.S. dollar, or 96.22 U.S. cents, up from
Wednesday's finish at C$1.0478 to the U.S. dollar, or 95.44
U.S. cents.
 The Canadian dollar had already been climbing early on
Thursday after the International Monetary Fund upgraded its
2010 global growth forecast and strong Australian jobs data
boosted higher-risk currencies. [ID:nTOE666034] [FRX/]
 "It's the ongoing gravitation towards risk-seeking trades,
that's the key driver," said Michael O'Neill, managing director
at Knightsbridge Foreign Exchange.
 "The whole investor mood, which is very fickle, is a little
more upbeat this week than it was last week."
  World stocks, another proxy of risk appetite, gained on
rising expectations the forthcoming U.S. corporate earnings
season would show strong performance, while oil rose above $75
a barrel. [MKTS/GLOB] [O/R]
 O'Neill said the short-term Canadian technical picture was
bullish. He said the break below C$1.0475 will target C$1.0344
and then C$1.0250.
 On the domestic front, data showed the price of new homes
in Canada rose 0.3 percent in May for the third straight month,
as expected. [ID:nN08203226] The focus is on Friday's critical
Canadian employment report, which O'Neill said could lead to
position-squaring later in the day.
 With "risk-on" in play, Canadian government bond prices
were mostly lower.
 The two-year government bond CA2YT=RR sagged 6 Canadian
cents to yield 1.665 percent, while the 10-year bond
CA10YT=RR was fell 33 Canadian cents to yield 3.212 percent.
 (Additional reporting by Claire Sibonney; Editing by Jeffrey