CANADA FX DEBT-C$ rises, bonds fall, on Greek relief talk

Tue Feb 9, 2010 4:26pm EST
 
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 * C$ rises to 93.64 U.S. cents
 * Bonds fall on Greece bailout speculation
 By Claire Sibonney
 TORONTO, Feb 9 (Reuters) - Canada's currency firmed against
the U.S. dollar on Tuesday as risk appetite was whetted by
reports of European rescue efforts for debt-strapped Greece.
  Markets were jittery over a flurry of headlines throughout
the day. They included European Central Bank President
Jean-Claude Trichet cutting short a trip to Australia to attend
a special European Union summit, and rumors, later denied, that
Germany was mulling a bailout package for Greece.
 Reuters reported euro zone governments have decided in
principle to help Greece in what would be the first rescue of a
euro zone member in the currency's 11-year history. [ID:
nSGE61801C]
 "The market has been chasing its tail back and forth, one
moment it's risk-on, one moment it's risk-off," said Steve
Butler, director of foreign exchange trading at Scotia Capital.
 "I'm not sure if it's going to be a bailout or not but that
seems to have taken a little bit of heat off the markets and
we've had a bit of a relief rally, especially in the equity
markets today."
 The Canadian dollar closed at C$1.0679, or 93.64 U.S.
cents, up from C$1.0745 to the U.S. dollar, or 93.07 U.S.
cents, at Monday's close. At one point during the North
American session, conflicting bailout reports and subsequent
risk aversion pulled the Canadian dollar as low as C$1.0775, or
92.81 U.S. cents.
 The euro, the currency at the center of the euro zone's
debt woes, was a main factor in driving the U.S. dollar lower,
as it was on track for its best one-day gain since November.
 Butler said investors are now looking for reassurance from
an informal summit of EU leaders on Thursday.
 Also supporting Canada's commodity-linked dollar were
firmer oil prices, which rose above $73 a barrel, and a 1
percent gain in gold prices. [O/R] [GOL/]
 EQUITIES UP, BONDS DOWN
 Canadian bond prices, mirroring U.S. Treasuries, were lower
across the curve on rising risk sentiment as global stocks
rallied.
 The two-year bond CA2YT=RR fell 7 Canadian cents to
C$100.435 to yield 1.284 percent, while the 10-year bond
CA10YT=RR lost 32 Canadian cents to C$102.87 to yield 3.387
percent.
 (Reporting by Claire Sibonney; editing by Peter Galloway)