CANADA FX DEBT-C$ jumps on equity rally, higher oil

Thu Nov 13, 2008 4:54pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

 * C$ rebounds after falling for three days
 * Oil rises 4 percent
 * Bond prices drop as stocks surge
 By Cameron French
 TORONTO, Nov 13 (Reuters) - The Canadian dollar rose for
the first time in four days on Thursday, catching fire late in
the session as oil prices rose and rallying stock markets
whetted the market's appetite for risk, prompting a shift away
from the safe haven of the U.S. dollar.
 Bond prices dropped as market players shifted funds to
rallying equity markets.
 The Canadian currency ended the session at C$1.2115 to the
U.S. dollar, or 82.54 U.S. cents, up from C$1.2374 to the U.S.
dollar, or 80.81 U.S. cents, at Wednesday's close.
 North American stocks soared from two-week lows after
plunging in the previous session.
 "Stocks have been raging, and that's just sent the market
into a tizzy this afternoon. We've seen a big big selloff in
the U.S. dollar and a big return to risk," said Steven Butler,
director of foreign exchange at Scotia Capital.
 The equity move also prompted a rally in oil prices, which
helped drive the Canadian dollar higher. Oil climbed 4 percent,
also helped by expectations OPEC could cut production later
this month. [ID:nN13381271]
 The equity rally overshadowed a report showing Canada's
trade surplus shrank more than expected in September as the
country sold less energy and fewer cars to the slowing U.S.
market.
 The surplus narrowed to C$4.49 billion ($3.65 billion), its
lowest level since January, from a revised C$5.63 billion in
August, according to Statistics Canada. The median forecast of
analysts in a Reuters poll was for a surplus of C$4.95
billion.
 BONDS PRICES DROP
 Canadian bond prices dropped as the stock market rally
prompted investors to pull funds from safe-haven government
bonds.
 "I think the tone was set by the stock market," said Carlos
Leitao, chief economist at Laurentian Bank of Canada.
 "Stocks were nuts over the last hours of trading."
 The only remaining data for the week will be on Friday when
the September survey of manufacturing is released.
 The Canadian overnight Libor rate LIBOR01 was 2.5583
percent.
 Thursday's CORRA rate CORRA= was 2.2437 percent, down
from 2.2486 percent on Wednesday. The Bank of Canada publishes
the previous day's rate at around 9 a.m. daily.
 The two-year bond fell 14 Canadian cents to C$101.67 to
yield 1.911 percent. The 10-year bond slid 75 Canadian cents to
C$104.00 to yield 3.746 percent.
 The yield spread between the two- and 10-year bond was 180
basis points, down from 186 basis points at the previous
close.
 The 30-year bond fell C$1.25 to C$111.35 to yield 4.305
percent. In the United States, the 30-year Treasury yielded
4.350 percent.
 (Editing by Rob Wilson)