RPT-CANADA FX DEBT-C$ edges higher on commodity price rise

Tue May 10, 2011 8:59am EDT
 
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 * C$ rises to $1.0429
 * Bond prices slightly lower across curve
 TORONTO, May 10 (Reuters) - The Canadian dollar edged
higher against the U.S. dollar on Tuesday, supported by firmer
commodity prices that rose on the back of robust China trade
figures pointing to a stronger global economy.
 China posted its biggest trade surplus in four months in
April as exports hit a record on stronger global demand,
highlighting strength in the world's second largest economy
despite its efforts to rein in inflation. [ID:nL3E7GA09F]
 The data spurred advances in world stocks and lifted most
commodity prices. Oil, however, was a key exclusion from the
general rise. [MKTS/GLOB]
 Oil prices fell partly because CME Group Inc CME.O, the
world's largest commodities exchange, raised the margin call on
crude futures for a fourth time since February in an effort to
curb volatility. [O/R]
 The price of oil typically is a key driver for the Canadian
dollar because of Canada's status as a net exporter of oil. But
on Tuesday, the Canadian dollar was on the rise.
 "That's actually interesting despite the fact you've had
the fall off in oil prices in the wake of the CME's decision,"
said Michael Gregory, senior economist at BMO Capital Markets.
 "Despite the petroleum prices, Canada is getting a net
benefit from commodities. And overall, global equities are
stronger this morning heading into the open, and I think it's a
sign that risk appetite has been whetted."
 At 8:05 a.m. (1205 GMT), the Canadian dollar CAD=D4 was
at C$0.9589 to the U.S. dollar, or $1.0429, up from Monday's
North American session close at C$0.9636 to the U.S. dollar, or
$1.0378.
 Canadian bond prices were slightly lower across the curve,
owing to a pickup in risk sentiment. The two-year Canadian
government bond CA2YT=RR was off 2 Canadian cents to yield
1.674 percent, while the 10-year bond CA10YT=RR dipped 3
Canadian cents to yield 3.198 percent.
 (Reporting by Ka Yan Ng; Editing by Padraic Cassidy)