CANADA FX DEBT-C$ nears parity after BoC, Flaherty comments

Mon Apr 12, 2010 1:19pm EDT
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 * Rises to North American session high of C$1.0011 to US$
 * Bank of Canada surveys see upbeat business mood
 * Finance minister says C$ rise "relatively orderly"
 * Housing starts unexpectedly dipped 1.5 pct in March
 * Bonds weaker across curve
 (Recasts with Bank of Canada survey, Flaherty comments)
 By Jennifer Kwan
 TORONTO, April 12 (Reuters) - The Canadian dollar
approached parity with the U.S. currency on Monday after a pair
of Bank of Canada surveys pointed to an upbeat business mood,
providing more reasons for the central bank to raise rates
 The currency touched a North American session high of
C$1.0011 to the U.S. dollar on Monday, or 99.89 U.S. cents,
after the rosy business mood was revealed in the central bank's
surveys and after Finance Minister Jim Flaherty repeated that
the recent rise by the currency has been "relatively orderly".
[ID:nN12187334] [ID:nN12123410]
 "Both (surveys) indicate that the economic recovery is very
much on its way. The economy is doing pretty well," said
Matthew Strauss, senior currency strategist at RBC Capital
Markets. He added the surveys support "the notion the Bank of
Canada will have to move on interest rates once the conditional
commitment expires".
 The bank has kept its overnight rate at a historic low of
0.25 percent since April 2009, and pledged to hold it at that
level until the end of June, unless inflation threatens to
spiral out of control.
 At 12:27 p.m. (1627 GMT), the Canadian dollar CAD=D3 was
at C$1.0023 to the U.S. dollar, or 99.77 U.S. cents, up from
Friday's close of C$1.0040 to the U.S. dollar, or 99.60 U.S.
 Flaherty's comments soothed any potential market jitters
about the currency's rise, Strauss said.
 "(The government) continues to emphasize or imply that it's
mostly fundamentals that have driven the Canadian dollar to
current levels rather than by speculation, i.e. from their side
they seem pretty comfortable with the current levels with the
Canadian dollar," he added.
 Earlier in the day, the currency weakened as euro zone
finance ministers agreed to a rescue package for Greece,
sparking a rush to buy the European currency.
 The ministers approved a 30 billion euro ($40.5 billion)
aid package of loans. For details see [ID:nLDE63A0BO]
 The euro rose to its highest level in nearly a month
against the U.S. dollar on Monday, though the currency trimmed
gains as investors sought more details. [FRX/]
 Data on Monday showed Canadian housing starts unexpectedly
dipped 1.5 percent in March, but the two previous months were
revised higher, suggesting the residential housing sector
remains a positive factor in the country's economic recovery.
 The housing figures followed a weaker-than-expected reading
for March employment on Friday. [ID:nN09253705]
 The currency's rise was also underpinned by news that
ConocoPhillips said it will sell its stake in Alberta oil sands
consortium Syncrude to China's Sinopec. The news fueled
speculation that more deals in the oil sands could follow, and
that subsequent merger and acquisition-related currency flows
could support the Canadian dollar. [IDnASA007TF]
 Canadian bond prices were flat to lower across the curve,
following U.S. Treasures down as the deal for Greece lessened
demand for lower-risk government debt. [US/]
 The two-year government bond CA2YT=RR fell 2 Canadian
cents to C$99.35 to yield 1.852 percent, while the 10-year bond
CA10YT=RR dropped 13 Canadian cents to C$100.64 to yield
3.667 percent.
  (Additional reporting by Ka Yan Ng; editing by Peter