CANADA FX DEBT-C$ surges 14-month high, boosted by oil, gold

Tue Oct 13, 2009 9:44am EDT
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 * 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.
 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
 (Editing by Jeffrey Hodgson)