CANADA FX DEBT-C$ gets boost from rally in oil prices

Fri Feb 13, 2009 4:24pm EST
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* Oil prices surge 10 percent, aid C$ rally

* Currency's move exaggerated by thin trade

* Bonds pinned lower in quiet, shortened session (Recasts with comments and closing numbers)

By Frank Pingue

TORONTO, Feb 13 (Reuters) - The Canadian dollar rallied against the greenback on Friday as a surge in oil prices gave the commodity-linked currency a boost in a quiet session that saw exaggerated moves in thin trade heading into a long weekend.

Currency experts also suggested that some traders may have been caught long on the U.S. dollar and squared positions as Group of Seven finance ministers meet in Rome this weekend.

And just as in recent sessions, Canada's currency generated buying interest mainly when it slipped down through C$1.25.

"The fact of the matter is dollar/Canada still really can't get any traction on the topside," said Steve Butler director of foreign exchange trading at Scotia Capital.

"And there were rumors the G7 might talk about the weak pound and within all that ... I think the market got caught a bit long so basically we just saw the (U.S.) dollar soften up."   Continued...