3 Min Read
* Commodities and weak US$ power move
* Bond prices up across the curve
By Frank Pingue
TORONTO, Oct 13 (Reuters) - Canada's currency raced to its highest level in 14 months on Tuesday as the backdrop of lofty commodity prices and upbeat domestic data helped put it within striking distance of parity with a weakening U.S. dollar.
The Canadian dollar raced to C$1.0265 to the U.S. dollar, or 97.42 U.S. cents, which marked its highest level since August 2008 and put it 27 percent above the four-year low it tumbled to in March.
Part of the move was attributed to the ongoing impact from Friday's domestic jobs data that humbled forecasts and ignited talk about whether the Bank of Canada will be forced to raise rates sooner than expected. [ID:nN09253705]
The currency also drew support from higher commodity prices for key Canadian exports, including gold prices that rallied to a record high and oil prices above $74 a barrel and within touching distance of its highest level this year. [GOL/] [O/R]
"Certainly it's building on some momentum it got from the employment numbers on Friday and obviously there's a lot of moving parts here, and one of them is commodities continue to do very well," said Steve Butler, director of foreign exchange trading at Scotia Capital.
"But deep down below I think the root of the move is really the weakness in the U.S. dollar and that just continues to be front page news and it seems everywhere you turn everybody is talking about the weak U.S. dollar."
At 9:25 a.m. (1325 GMT), the Canadian unit was at C$1.0316 to the U.S. dollar, or 96.94 U.S. cents, up from C$1.0444 to the U.S. dollar, or 95.75 U.S. cents, at Friday's close.
The Bank of Canada did not offer an official closing value for the currency on Monday as it was the Thanksgiving Day holiday in Canada.
The latest data out of Canada showed new house prices rose for the second straight month in August, up 0.1 percent, which was just below expectations for a 0.2 percent climb. [ID:N13175774]
BOND PRICES HIGHER
Canadian bond prices were slightly higher across the curve, tracking the move in the bigger U.S. Treasury market given some data from overseas that curbed expectations for a strong economic recovery.
The latest data to spark demand for more secure government debt was a measure of German investor morale that unexpectedly fell in October, suggesting Europe's largest economy will recover only gradually. [ID:nLD628386]
That report followed recent U.S. unemployment data that revealed bigger-than-forecast job losses.
The two-year CA2YT=RR bond was up 10 Canadian cents at C$99.66 to yield 1.658 percent, while the 30-year bond CA10YT=RR was up 40 Canadian cents at C$117.60 to yield 3.947 percent. (Editing by Jeffrey Hodgson)