CANADA FX DEBT-C$ touches 3-week high as equities rally

Tue Jul 14, 2009 4:55pm EDT
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 * C$ finishes at C$1.1360 to the U.S. dollar
 * Touches highest level since June 22
 * Bond prices lower across curve, follow U.S. Treasuries
 (Adds details, quotes)
 By Jennifer Kwan
 TORONTO, July 14 (Reuters) - Canada's dollar shot to its
highest level against the U.S. currency in three weeks on Tuesday as strong
earnings at Goldman Sachs encouraged stock markets and lured investors toward
greater risk.
 The Canadian dollar rose as high as C$1.1343 to the U.S.
dollar, or 88.16 U.S. cents, its highest level since June 22.
 But it backed off that mark slightly to finish at C$1.1360
to the U.S. dollar, or 88.03 U.S. cents, up for a second
straight session, and comfortably higher than Monday's closing
level of C$1.1518 to the U.S. dollar, or 86.82 U.S. cents.
 "I think it just seems like an overall optimistic feeling
of what's going on with Q2 earnings and the fact that equity
markets are posting small gains," said Jean-Philippe Blais,
vice president foreign exchange products at BMO Capital
 Quarterly earnings at Goldman Sachs Group Inc GS.N, seen
as a bellwether for the financial sector, soared on trading
results [ID:nN14289399], helping equities higher on Tuesday and
spurring risk sentiment for the Canadian dollar.
 "Technical plays" helped also, Blais said.
 "Both yesterday and today in late morning we ran into stops
where people were caught long dollar/Canada, so Canada seems to
be doing well," he said.
  The currency also drew strength from a rise in prices for
gold [ID:nN14559168], a mainstay of the Canadian mining
industry. Oil prices helped support the currency for most of
the day before settling slightly lower on demand concerns.
  The greenback struggled against most major currencies on
Tuesday as investors flocked to higher-yielding assets. [FRX/]
 Housing data that showed sales of existing homes in Canada
rose sharply in the second quarter from the first was another
factor giving the Canadian dollar support. [ID:nN14267126]
 Canadian bond prices were lower across the curve as money
moved out of safe-haven assets and into stocks, said Sheldon
Dong, fixed income analyst at TD Waterhouse Private
 "The risk markets are fairly healthy," he said, noting the
housing data helped to improve risk appetite.
 The Canadian market also trailed the bigger U.S. Treasury
market, where prices fell on profit-taking and a rosier outlook
for some financial companies. [ID:nN14419075]
 The two-year Canada bond was down 6 Canadian cents at
C$100.07 to yield 1.214 percent, while the 10-year bond
retreated 85 Canadian cents to C$102.70 to yield 3.425
 The 30-year bond fell C$1.45 to C$117.10 to yield 3.979
percent. In the United States, the 30-year Treasury yielded
4.3512 percent.
 The Canadian 30-year bond was 37 basis points below the
U.S. 30-year yield, compared with about 34 basis points below
on Monday.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)