CANADA FX DEBT-C$ climbs on renewed risk appetite, optimism

Tue Jul 13, 2010 10:50am EDT
 
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 * Canadian dollar touches high of 97.16 U.S. cents
 * Bond prices rise on risk play
 (Updates to midmorning, adds quotes)
 By Jennifer Kwan
 TORONTO, July 13 (Reuters) - The Canadian dollar touched
its highest level in nearly three weeks on Tuesday, following
domestic trade data that highlighted strength in business and
consumer demand, and a successful Greek auction that eased
worries about euro-zone debt.
 The Canadian dollar touched a high of C$1.0292 to the U.S.
dollar, or 97.16 U.S. cents, its highest level since June 23,
bolstered by rallying global equity markets after Greece
successfully returned to capital markets for the first time
since late April. [MKTS/GLOB]
  Athens sold 1.625 billion euros of six-month treasury
bills, passing its first borrowing test since securing a 110
billion euro emergency funding deal in May. [ID:nLDE66C0DH]
 As well, domestic data showed that strong demand from
Canadian businesses and consumers triggered a surge in imports
in May that outpaced exports, leading to the third consecutive
monthly trade deficit. [ID:nN13232203]
 "The expectation was that it would be flat and the prior
number was revised lower, so wider, and that has negative
implications for GDP," said Camilla Sutton, currency strategist
at Scotia Capital.
 "But when you look at the details the imports were very
strong, which is also good sign there's ongoing demand."
 At 10:17 a.m. (1417 GMT), the Canadian dollar CAD=D4 was
at C$1.0314 to the U.S. dollar, or 96.96 U.S. cents, up from
Monday's finish at C$1.0375 to the U.S. dollar, or 96.39 U.S.
cents.
 Increased risk appetite saw global equities advance on
earnings optimism, while the oil price rose above $76 a barrel
on optimism for the economic recovery and stronger demand.
[MKTS/GLOB] [O/R]
 "The risk mode is risk-on," said Sutton, who noted that a
softer U.S. dollar was also helping Canada's currency
strengthen. [FRX/]
 Adam Cole, global head of FX strategy at RBC Capital
Markets, said the Canadian dollar was trapped in the range of
C$1.0300 to C$1.0420 to the U.S. dollar for now, and a break of
either side would determine the directional bias.
 BONDS FALL AS STOCKS RALLY
 Canadian bond prices fell across the curve as investors
flocked to higher-yielding assets following Greece's debt sale.
[US/]
 The two-year bond CA2YT=RR sagged 5 Canadian cents to
yield 1.709 percent, while the 10-year bond CA10YT=RR shed 40
Canadian cents to yield 3.261 percent.
 (Additional reporting by Claire Sibonney; editing by Rob
Wilson)