CANADA FX DEBT-C$ hits two-week high on revived risk appetite
* C$ jumps to 95.39 U.S. cents
* C$ highest vs euro since Dec. 2007
* Bonds hurt by rising risk appetite
By Claire Sibonney
TORONTO, Feb 11 (Reuters) - Canada's currency jumped to a two-week high against the U.S. dollar on Thursday, as a stable economic backdrop boosted investors' confidence and appetite for risk.
Overnight, the Canadian currency reacted positively to stronger than expected Australian jobs data, which sent the greenback lower, as well as a rise in commodity prices.
"We've seen quite a big move in some of the Canadian dollar crosses," said Shaun Osborne, chief currency strategist at TD Securities, referring to the Canadian dollar reaching its strongest level against the euro since December 2007 at C$1.4334.
"It continues to highlight just how Canada has really held up over the course of the last few weeks in the period of fairly significant uncertainty and broader market volatility," he said.
"The financial sector is holding up relatively well, the fiscal situation in Canada being much more sustainable than some of its larger economy peers, and people like the Canadian dollar story at the moment," Osborne said.
At 1:24 p.m. (1824 GMT) the Canadian dollar was at C$1.0483 to the U.S. dollar, or 95.39 U.S. cents, up from Wednesday's close at C$1.0630, or 94.07 U.S. cents. Earlier, the currency hit C$1.0480 to the U.S. dollar, or 95.42 U.S. cents, its highest level since Jan. 22.
The commodity-linked currency got additional support from a rise in oil and gold prices, but Osborne did not think that was a big factor in today's move.
"We have seen a bit of a bounce in crude prices but I think it (the currency's rise) reflects the general confidence in the outlook for the Canadian dollar more than anything specific at the moment," he said.
Oil steadied above $74 per barrel after European leaders reached a deal to rescue the Greek economy while bullion prices climbed to near a one-week high. [O/R] [GOL/]
Osborne said the Canadian dollar broke through a key level of short-term support, which was around C$1.0550 to the U.S. dollar, this morning.
"Now, I'd be looking at C$1.0400 to C$1.0410 ... so if we break that we could we a very rapid move back towards C$1.02," he said.
BONDS MOSTLY LOWER
With risk appetite back on, Canadian bond prices were mostly lower across the curve.
"People, I think, have been parking their money in the fixed-income area over the last couple of weeks given the uncertainty that's been present in Europe," said George Davis, chief technical strategist at RBC Capital Markets.
"But, given that equity markets are stabilized now, that certainly has triggered people to get out of their fixed income holdings."
The two-year bond CA2YT=RR was down 10 Canadian cents at C$100.220 to yield 1.390 percent, while the 10-year bond CA10YT=RR was off 38 Canadian cents at C$102.100 to yield 3.483 percent. (Reporting by Claire Sibonney; editing by Rob Wilson)
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