CANADA FX DEBT-C$ rises on firmer oil, risk aversion fades

Thu Jul 9, 2009 4:58pm EDT
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 * Canadian dollar finishes at 86.04 U.S. cents
 * Commodities and equities fuel gain
 * Bond prices fall across curve
 (Adds details, quote)
 By Jennifer Kwan
 TORONTO, July 9 (Reuters) - The Canadian dollar climbed
against the U.S. dollar on Thursday as higher commodity prices
and a rebound in global equities helped ease investor aversion
to risk, boosting currencies perceived to be riskier than the
 The rise in the Canadian dollar, which rallied as high as
C$1.1547 to the U.S. dollar, or 86.60 U.S. cents, lifted it
comfortably off the seven-week low it touched this week.
 "Equity markets have bounced back ... so that's provided
some comfort for people that take on riskier positions," said
David Watt, senior currency strategist at RBC Capital Markets.
 The Canadian currency finished at C$1.1623 to the U.S.
dollar, or 86.04 U.S. cents, up from C$1.1676 to the U.S.
dollar, or 85.65 U.S. cents, at Wednesday's close.
 Oil prices ended higher on Thursday, snapping a six-session
skid [ID:nN09473435], while gold and base metals prices were
also higher. Canada is a key exporter of oil and gold and the
currency is often influenced by their prices.
 Rises in global stock markets [MKTS/GLOB] also reinforced
investor confidence in the Canadian dollar.
 While the currency's rise, the market was wary ahead of
Canada's June jobs report on Friday morning, Watt said.
 Analysts forecast [ID:nN08393089] big job losses in June,
with the unemployment rate rising to an 11-year high despite
signs of economic stabilization.
 The median forecast in a Reuters survey was for a net loss
of 35,000 jobs last month and a rise in the unemployment rate
to 8.7 percent from 8.4 percent in May, the highest level since
January 1998.
 Canadian bond prices were lower across the curve as money
flowed to stocks and the market declined in sympathy with the
bigger U.S. Treasury market, where benchmark yields came off
seven-week lows. [ID:nN09469302]
 "After yesterday's extreme rally we've seen a bit of a
backing off today," said Doug Porter, deputy chief economist
BMO Capital Markets.
 The two-year Canada bond was down 3 Canadian cents at
C$100.14 to yield 1.174 percent, while the 10-year bond fell 27
Canadian cents to C$103.75 to yield 3.302 percent.
 The 30-year bond retreated 60 Canadian cents to C$119.30 to
yield 3.863 percent. In the United States, the 30-year Treasury
yielded 4.2758 percent.
 Canadian bonds mostly outperformed U.S. Treasuries across
the curve. The Canadian 30-year bond was 41 basis points below
the U.S. 30-year yield, compared with about 35 basis points
below on Wednesday.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)