CANADA FX DEBT-C$ gains, steadies around a one-week high

Wed May 11, 2011 8:32am EDT
 
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 * C$ edges up to C$0.9542 to the U.S. dollar, or $1.0480
 * Strong Canada dollar reflects confidence-Flaherty
 * Bond prices mildly lower
 TORONTO, May 11 (Reuters) - Canada's dollar rose moderately
against the U.S. currency on Wednesday and then held steady
near a one-week high after breaking through a technical level.
 At 8:15 a.m. (1215 GMT), the Canadian dollar CAD=D4 was
at C$0.9542 to the U.S. dollar, or $1.0480, up from Tuesday's
North American session close at C$0.9577 to the U.S. dollar, or
$1.0442.
 The currency advanced steadily against the greenback
overnight, pushing past the C$0.9570 area, spurred by risk
sentiment, and again despite soft oil prices. The price of U.S.
oil is often a key driver for the Canadian dollar because of
Canada's status as an oil exporter.
 But after tipping to C$0.9513 to the U.S. dollar, it pared
gains and appeared to hit a wall around C$0.9520.
 The currency "hasn't been able to bounce more than 15 to 20
points since we hit the C$0.9520 level," said David Bradley,
director of foreign exchange trading at Scotia Capita, adding
that the currency hasn't found inspiration to move even in the
face of weakness in commodity prices.
 Bradley said there was also speculation of
merger-and-acquisition related trades flowing through the
market, as well as interest from Asian central banks to buy
commodity-linked currencies such as the Australian and Canadian
dollars in the overnight session.
 Longer-term, the Canadian dollar is still underpinned by
strong fundamentals, he said.
 Late on Tuesday, Finance Minister Jim Flaherty said
Canada's strong currency reflects confidence in its economy,
though sharp moves in its value are not welcome. He said he
didn't want to see further U.S. dollar weakness and thought
strong Canadian and U.S. currencies were both positive for the
world. [ID:nN10140882]
 Canadian bond prices fell across the curve, extending a
recent decline on rising risk sentiment. World stocks rose for
a second straight day on Wednesday thanks to favourable U.S.
and European corporate results.
 The two-year Canadian government bond CA2YT=RR fell 3
Canadian cents to yield 1.739 percent, while the 10-year bond
CA10YT=RR lost 14 Canadian cents to yield 3.286 percent.
 Traders also monitored mounting uncertainty over whether
euro zone officials would provide timely financial aid to
debt-laden Greece and Portugal.
 (Reporting by Ka Yan Ng; Editing by Padraic Cassidy)