CANADA FX DEBT-C$ inches up with oil support, bonds mixed

Tue Jun 15, 2010 11:50am EDT
 
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 * C$ edges up to 97.18 U.S. cents
 * Bonds mixed
 * Growth in Canada factory sales, productivity slows
 (Updates to late morning)
 By Ka Yan Ng
 TORONTO, June 15 (Reuters) - The Canadian dollar held
higher against the U.S. currency on Tuesday late morning on
firmer energy prices, while strong demand for European debt
gave anxious investors some relief about the euro zone's
finances.
 North American stock markets were higher following strength in overseas
equity markets, whetting investor appetite for riskier assets. [.N] [.TO]
 Solid demand at debt auctions in Spain, Ireland and Belgium
kept the euro higher and offset a weak German ZEW investor
sentiment survey. [FRX/] [ID:nLDE65E0WQ] [ID:nWLA6316]
[ID:nTAR001853]
 At 11:20 a.m. (1520 GMT), Canada's dollar was at C$1.0290
to the U.S. dollar, or 97.18 U.S. cents, up from C$1.0325 to
the U.S. dollar, or 96.85 U.S. cents, at Monday's close.
 "We're more of a follower than a leader on the current
move. This is more being driven by a resurgence in European
currencies," said Shane Enright, executive director at CIBC
World Markets.
 Oil prices stood about 2 percent higher, while natural gas
rose about 1.6 percent, adding to gains from the previous
session. The Canadian dollar's movements are often influenced
by commodity prices. [O/R]
 "Ultimately these things are supportive for the Canadian
dollar. I still see room for the Canadian dollar to run a
little bit stronger but thus far today it's been quiet," said
Enright.
 The day's domestic data hardened expectations that
second-quarter economic growth will be less robust than in the
previous two quarters, but not bad enough to derail
expectations that the Bank of Canada will continue to raise
interest rates. [ID:nN15258387]
 Growth in Canadian manufacturing sales slowed in April and
productivity came in lower than expected in the first quarter.
 BONDS MILDLY MIXED
 Canadian bond prices were mixed across the curve and against U.S.
Treasuries, which were mostly flat as talk of enduring dovishness in U.S.
monetary policy competed with signs of renewed risk appetite.  [US/]
 The two-year government bond CA2YT=RR was off 2 Canadian
cents to yield 1.818 percent, while the 10-year bond
CA10YT=RR edged up 19 Canadian cents to yield 3.409 percent.
 In debt offerings, Quebec sold C$500 million of six-year
notes in a reopening of an existing 3.50 percent issue, while
Canada Housing Trust on Tuesday sold C$5.5 billion of five-year
notes due June 15, 2015, according to term sheets seen by
Reuters. [ISU-CAN]
 (Reporting by Ka Yan Ng;editing by Mario Di Simine )