CANADA FX DEBT-C$ ends higher as US stimulus deal sparks rally

Wed Feb 11, 2009 4:38pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* C$ gets late-session boost from U.S. stimulus deal

* Rally erases early fall on surprise Canada trade deficit

* Shorter-dated bonds end lower as risk appetite returns (Recasts with comments and closing numbers)

By Frank Pingue

TORONTO, Feb 11 (Reuters) - Canada's dollar raced off its session low below 80 U.S. cents to close higher on Wednesday as a congressional deal on a U.S. economic stimulus package helped the market shrug off the announcement of a surprise Canadian trade deficit and left it more willing to take on risk.

The rally in the Canadian dollar came late in the day after the U.S. Congress reached a compromise on a $789 billion package of spending and tax cuts designed to revive the recession-hit U.S. economy. [ID:nN11379390]

That proved enough to allow the currency reclaim losses suffered when data showed Canada had a trade deficit of C$460 million in December versus expectations of a surplus. It was the country's first monthly trade deficit in almost 33 years. The figures followed a report last week that showed Canada suffered its worst monthly job losses in more than three decades in January. [ID:nN11]

"We've had quite a couple of really significantly poor data points over the course of the last few days and the Canadian dollar really hasn't looked liked it wants to sell off," said Shaun Osborne, chief currency strategist at TD Securities.

"I don't think we are necessarily reacting to fundamentals at the moment ... we are seeing more correlation with risk appetite and that seems to be the driver."   Continued...