CANADA FX DEBT-C$ highest since May 18 on recovery prospects
* C$ rises to 96.62 U.S. cents
* Strong Aussie data plus New Zealand rate hike help mood
* Bond prices sag as safe-haven bid cools
By John McCrank
TORONTO, June 10 (Reuters) - Canada's dollar rose to its highest point in over three weeks against the greenback on Thursday after a stellar report for Chinese exports in May, increasing hopes for the global economic recovery and giving a bid to commodity prices.
Chinese exports surged in May by 48.5 percent over a year earlier, well above forecasts for a 32 percent gain, confirming a Reuters report from Wednesday. [ID:nTOE65901X]
"On the back of that, we saw commodity prices rise with oil up toward $75," said Matthew Strauss, senior currency strategist at RBC Capital Markets. [ID:nSGE659083]
Canada is a major exporter of commodities and is the biggest oil supplier to the United States.
"So the Canadian dollar is benefiting from that as well as the general move out of the U.S. dollar," said Strauss.
He added that the Canadian dollar was outperforming the yen and the greenback, both of which are often seen as safe-haven currencies, where investors seek refuge when the economic mood sours.
At 8:40 a.m. the Canadian dollar was at C$1.0350 to the U.S. dollar, or 96.62 U.S. cents, up from Wednesday's North American finish of C$1.0443 to the U.S. dollar, or 95.76 U.S. cents. It was the currency's strongest level since May 18.
The currency was trading one-for-one with the greenback through much of April as the global economy appeared to be on the mend and on the back of Canada's strong economic fundamentals -- seen to be the strongest in the G8.
But the sovereign debt situation in Europe put a healthy dose of fear back into the markets, giving a bid to the U.S. dollar and sending commodity prices lower.
As a result, Canada's dollar hit a low of C$1.0851, or 92.16 U.S. cents, on May 25, but has been slowly been gaining ground as the concerns out of Europe eased and the global recovery was seen gaining momentum.
On Thursday, a robust employment report out of Australia helped cheer market sentiment, as did a move by New Zealand's central bank to lift interest rates from a record low, its first hike since the global economic crisis. [ID:nSGE6580KR] [ID:nSGE65904N]
The return to risk appetite was evident in U.S. stock futures, which pointed to gains on Wall Street [ID:nN10203396]
There is no major Canadian data on tap.
Bank of Canada Governor Mark Carney gave a speech in Montreal on Thursday urging the G20 to push ahead quickly with "radical" financial reforms but signaled flexibility on when new global banking rules would be phased in. [ID:nN10199122] [nN10517170]
Canada will host a meeting of G20 leaders on June 26-27 in Toronto.
CANADIAN BOND PRICES DIP
Canadian bond prices edged lower across the curve, as risk appetite rose, cooling bids from investors seeking the safety of government debt.
The two-year government bond CA2YT=RR fell 8 Canadian cents to yield 1.759 percent, while the 10-year bond CA10YT=RR fell 22 Canadian cents to yield 3.381 percent. (Editing by Chizu Nomiyama)
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