CANADA FX DEBT-New bank rules, Chinese data push C$ higher

Mon Sep 13, 2010 5:04pm EDT
 
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 * C$ ends higher at 97.34 U.S. cents
 * Bonds edge up as market players consider rate moves
 * Focus on Canada central bankers, U.S. data this week
 (Updates to close)
 TORONTO, Sept 13 (Reuters) - The Canadian dollar climbed to
a three-week high against the U.S. currency on Monday as upbeat
Chinese data and relief about the impact of new global banking
regulations whetted investor appetite for riskier assets.
 The currency hit its highest level against the greenback
since Aug. 19  -- C$1.0265 to the U.S. dollar, or 97.42 U.S.
cents -- and then pared gains to close at C$1.0273 to the U.S.
dollar, or 97.34 U.S. cents. That was still firmer than
Friday's close of C$1.0351 to the U.S. dollar, or 96.61 U.S.
cents.
 "This is the strongest the Canadian dollar has been in
quite some time," said Eric Lascelles, chief Canada macro
strategist, at TD Securities. "We're bumping up against a
little bit of resistance and we'll see whether we can break our
way through C$1.0240. Generally speaking it's been a risk
appetite day."
 He said part of the reason for the rise was that investors
were "warm and fuzzy" over Basel III developments after global
regulators meeting in Switzerland agreed on the weekend to
force banks to more than triple the amount of top-quality
capital they must hold in reserve. Canadian banks were seen as
being able to take he new rules in stride. [ID:nLDE68B0BP]
[ID:nN13189759]
 Strong Chinese data, including factory and money growth
figures, showed the economy remained buoyant despite government
efforts to clamp down on bank lending and property speculation.
[ID:nTOE68A00H]
 "We have risk appetite that's increased since China
released its data," said Camilla Sutton, currency strategist at
Scotia Capital.
 "I think that's reassured the market for the outlook for
global growth and that's good news for Canada."
 Sutton said focus this week will be on speeches by Bank of
Canada Governor Mark Carney, as well as Deputy Governor Timothy
Lane. In the United States, data of key interest includes
retail sales and inflation figures. ECONUS
 BONDS GAIN AS WELL
 Canadian bond prices turned higher on Monday across the
curve as market players assessed the outlook for the economy as
positive for bonds even though risk appetite was strong in
other markets.
 There was no Canadian data on Monday, but Lascelles said
the market weighed last week's interest rate hike and hawkish
Bank of Canada's statements against Carney's more dovish
remarks on Friday at a panel discussion.
 Investors also considered remarks by Finance Minister Jim
Flaherty on Monday in which he welcomed signs that the Canadian
housing market has cooled. [ID:nN13124201]
 "There's a full gamut of views out there right now (on the
Bank of Canada's path of monetary policy). So the market is
unusually jittery, but I'm inclined to think that we don't get
those (rate) hikes in October," Lascelles said.
 The two-year Canada bond was up 1 Canadian cent to yield
1.459 percent, while the 10-year bond rose 21 Canadian cents to
yield 3.078 percent. Canadian government bonds mostly
underperformed across the curve against their U.S.
counterparts.
 (Reporting by Ka Yan Ng and Jennifer Kwan; editing by Peter
Galloway)