CANADA FX DEBT-C$ hits 6-month high; records 9th week of gains

Fri May 8, 2009 5:02pm EDT
 
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 * C$ hits session high of 87.03 U.S. cents
 * Jobs data and equity rally fuel C$'s rise
 * Bond prices knocked lower across the curve
 (Recasts)
 By Frank Pingue
 TORONTO, May 8 (Reuters) - The Canadian dollar capped off
its ninth straight week of gains with a surge to its highest
level in over six months on Friday as investor appetite for
risk surged after domestic and U.S. jobs data beat
expectations.
 Together the two reports offered more hope that the global
recession could be easing and gave a meaty boost to perceived
risky currencies alongside surges in North American equities
and the price of oil, a key Canadian export.
 "We're seeing risk come back to the market and that's
pushing commodity currencies higher as the flight to safety
play comes out of the U.S. dollar," said Mark Frey, head trader
at Custom House, a currency services firm in British Columbia.
 "It's really just a factor of the market sentiment shifting
and becoming pretty robustly optimistic about future prospects
at this point."
 The Canadian dollar rallied as high as C$1.1490 to the U.S.
dollar, or 87.03 U.S. cents, after the official Bank of Canada
closing figure was provided, building on gains recorded after
the Canadian and U.S. job data.
 The Canadian jobs report showed employers unexpectedly
added 35,900 jobs in April whereas analysts' were positioned
for more heavy job losses. [ID:N08444159]
 That was followed shortly after by U.S. data that showed
employers cut less jobs than expected in April.
[ID:nN07416806]
 The Canadian unit went on to close the session at C$1.1497
to the U.S. dollar, or 86.98 U.S. cents, a more than 1.5 U.S.
cent climb above Thursday's session close of C$1.1725 to the
U.S. dollar, or 85.29 U.S. cents.
 Also helping to keep momentum behind the Canadian dollar's
session-long rally, was a more-than 3 percent rise in the price
of oil to a near six-month high, and the rise in North American
equities.
 BOND PRICES LOWER
 Canadian bond prices finished lower across the curve as the
upbeat employment figures lessened the appeal of more secure
assets like government debt and convinced many investors to opt
for equities.
 Toronto's key stock index closed 2.72 percent higher while
the Dow Jones industrial average ended up 1.96 percent.
 The benchmark two-year Canadian government bond ended down
12 Canadian cents at C$100.25 to yield 1.126 percent, while the
10-year bond slipped 28 Canadian cents to C$105.02 to yield
3.164 percent.
 The 30-year bond dropped 25 Canadian cents to C$118.05 to
yield 3.932 percent.
 Canadian bonds underperformed their U.S. counterparts
across much of the curve, especially at the long end. The
30-year bond yield was about 35 basis points below the U.S.
30-year yield, compared with around 43 basis points below on
Thursday.
 (Editing by Jeffrey Hodgson)