CANADA FX DEBT-C$ edges higher as commodity prices rebound
* C$ ends up at C$0.9636 vs US$, or $1.0378
* Bond prices firm across curve (Updates to close, adds details, commentary)
By Claire Sibonney
TORONTO, May 9 (Reuters) - The commodity-driven Canadian dollar pushed higher against the greenback on Monday, as a rebound in energy and metal prices trumped worries about European sovereign debt.
U.S. crude oil futures rebounded from last week's massive losses to end above $102 a barrel, as droves of bargain-hunters entered the market. [O/R]
"Since we've had a relatively nasty four-day slide, the fact that it's just stopped is certainly suggesting that the global economic backdrop is not as worrisome now as it was three days ago when oil seemed to be dropping a big figure every couple of hours," said David Watt, senior currency strategist at RBC Capital Markets.
"The general backdrop overall is more supportive of the global economic recovery than it was last week when it seemed like fear was the dominant theme."
Precious metal prices joined in the advance, as gold gained 1 percent and silver surged 5 percent. [GOL/]
Weighing on sentiment however, the euro hovered near a three-week low against the U.S. dollar, after Standard and Poor's cut Greece's credit rating to B from BB- on concerns that a debt restructuring is increasingly likely. [FRX/] [ID:nLDE6BK0HE]
"It's still undecided in terms of where to take currency valuations, given last Thursday and Friday's massive short squeeze in the euro," said Jack Spitz, managing director of foreign exchange at National Bank Financial, noting the disconnect between rising commodity prices and falling European equity markets earlier in the day.
"The U.S. dollar itself is prime for a continued short squeeze so we could be seeing more U.S. dollar gains which could ultimately reflect itself in more bids in dollar/Canada as well."
The Canadian dollar CAD=D4 ended the North American session at C$0.9636 to the U.S. dollar, or $1.0378, up from Friday's close at C$0.9670 to the U.S. dollar, or $1.0341.
With no major data on Monday, investors will be looking for further catalysts to set the tone for the rest of the week. [ID:nN09216730]
Near term, Watt said resistance for the Canadian dollar was around C$0.9560, and support at C$0.9720.
A slew of upcoming economic data from China, European inflation figures and North American trade figures are expected to provide further direction this week.
Canadian bond prices picked up across the curve.
They outperformed their U.S. counterparts slightly on the long end, as investors turned away from Treasuries in favor of commodities and stocks ahead of the sale of $72 billion of U.S. government debts this week. [US/]
The two-year Canadian government bond CA2YT=RR was up half a Canadian cent to yield 1.661 percent, while the 10-year bond CA2YT=RR rallied 15 Canadian cents to yield 3.178 percent. (Reporting by Claire Sibonney; editing by Rob Wilson)
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