CANADA FX DEBT-C$ hits 2-week high as risk appetite increases

Mon Nov 9, 2009 12:03pm EST
 
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 * C$ hits session high of C$1.0555 per US$
 * Oil and gold prices help power gain
 * Bonds mostly flat across curve
 (Updates to midday)
 By Frank Pingue
 TORONTO, Nov 9 (Reuters) - Canada's dollar hit its highest
level in two weeks on Monday thanks to a Group of 20 promise to
keep stimulus policies in place, a rise in commodity prices and
a generally weaker U.S. currency.
 The rally by the Canadian dollar started overnight and then
carried into the North American session where it broke through
technical levels that triggered a wave of buying.
 It rose as high as C$1.0555 to the U.S. dollar, or 94.74
U.S. cents, its highest level since Oct. 26, before backing off
slightly.
 "The market is a bit more risk-seeking today given how
stocks and commodities are doing, so that's generally what's
hurting the U.S. dollar and benefiting the Canadian dollar,"
said George Davis, chief technical strategist RBC Capital
Markets.
 "And once the C$1.06 level gave way we saw a pretty quick
acceleration to the downside that's taken us down to C$1.0555
as the low so far."
 The G20 finance ministers and central bank governors, who
met over the weekend in Scotland, refrained from directly
addressing currencies in talks on rebalancing the global
economy. [ID:nLQ516726]
 Also, the International Monetary Fund said in a report that
while the U.S. dollar had depreciated in recent months it was
still on the "strong" side, putting pressure on the U.S.
currency.
 By 11:55 p.m. (1655 GMT), the Canadian dollar was at
C$1.0570 to the U.S. dollar, or 94.61 U.S. cents, up from
C$1.0753 to the U.S. dollar, or 93.00 U.S. cents, at Friday's
close.
 The Canadian unit's strength was in line with other global
currencies that benefited from renewed risk appetite, which
suggested U.S. interest rates will stay low for some time,
particularly after last week's soft U.S. jobs data. [FRX/]
 "It's really the comments that were attributed to the IMF
as well as the G20 that have had the U.S. dollar under
pressure," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.
 "The week is starting with increased risk appetite. Once
again there's no guarantee that risk appetite maintains itself
because there's a lot of volatility in these markets right
now."
 Bouncing off its lowest closing level in nearly a week on
Friday, the Canadian dollar also drew support from record gold
and rising oil prices [GOL/] [O/R] as well as rallies in North
American equities.
 BONDS FLAT
 Canadian bond prices were straddling the break-even level
as the renewed risk appetite helped boost global stocks and
lessened the appeal of more secure government debt.
 Bond prices also had little reaction to Canadian data that
showed housing starts rose in October. [ID:nHND005510]
 The two-year bond CA2YT=RR was down 1 Canadian cents at
C$99.69 to yield 1.406 percent, while the 10-year bond
CA10YT=RR rose 5 Canadian cents to C$101.90 to yield 3.513
percent.
 (Additional reporting by Ka Yan Ng; editing by Rob Wilson)