CANADA FX DEBT-C$ climbs to 6-wk high on rising stocks, oil

Wed Sep 16, 2009 4:58pm EDT
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 * C$ closes at 93.91 U.S. cents, shy of day's high
 * Touches highest level since early August
 * Bonds mostly lower as stocks shoot higher
 By Ka Yan Ng
 TORONTO, Sept 16 (Reuters) - The Canadian dollar flew to a
six-week high against the U.S. currency on Wednesday as global
risk appetite grew and commodity prices firmed.
 The greenback hit a one-year low against a basket of
currencies as optimism about a global economic recovery eroded
demand for the greenback as a safe haven.
 Events and data this week have helped to boost investor
optimism about the pace of economic recovery, lighting a fire
under world stocks and weakening the U.S. dollar.
 "Risk is the mantra for the market today, with global
equities higher, commodities stronger," said John Curran,
senior vice-president at CanadianForex, a commercial foreign
exchange firm.
 The unit raced as high as C$1.0643 to the U.S. dollar, or
93.96 U.S. cents, its highest level since Aug. 4.
 It closed just shy of the high at C$1.0649 to the U.S.
dollar, or 93.91 U.S. cents, up from Tuesday's close at
C$1.0714 to the U.S. dollar, or 93.34 U.S. cents.
 Curran noted the Canadian dollar has been unable to break
out of a C$1.0630-C$1.1125 range that it has largely been held
in since mid-July.
 The Canadian dollar drew support after a report that
domestic manufacturing sales rose in July at their fastest pace
in 12 years. [ID:nN16446129]. It also got a boost from stronger
commodity prices and healthy equity markets.
 Toronto stocks closed higher for a fifth straight session
[ID:nTOR004978], largely on increased demand for resource
issues, as the price of oil CLc1 climbed above $72 a barrel
and gold soared to an 18-month high above $1,020 an ounce.
[O/R] [MET/]
 The Canadian currency often takes its cue from moves by
stock markets and commodity prices, especially oil which is a
key Canadian export, with each seen as a barometer of risk
 Wednesday's rise extended gains from the previous session,
which came on robust U.S. retail sales and manufacturing data,
and upbeat comments by U.S. Federal Reserve Chairman Ben
 Bernanke said the recession had likely ended but said the
recovery would be moderate at best. The comments also helped to
support the desire by investors to take on more risk.
 "The simple fact that Bernanke said the recession is likely
over is very much a statement that favors the risk-loving trade
and as a result the safe-haven bid for the U.S. dollar has been
declining," said Eric Lascelles, chief economics and rates
strategist at TD Securities.
 Canadian bond prices slipped across most of the curve on
Wednesday, following gains on stock markets. Bonds and stocks
typically trade inversely to one another.
 The two-year bond CA2YT=RR fell 8 Canadian cents to
C$99.46 to yield 1.284 percent, while the 10-year bond
CA10YT=RR shed 12 Canadian cents to C$103.05 to yield 3.378
percent. The 30-year bond CA30YT=RR rose 20 Canadian cents to
C$118.80 to yield 3.885 percent.
 Canadian bonds outperformed their U.S. counterparts across
the curve. The Canadian 10-year bond yield moved to 9.2 basis
points below its U.S. counterpart, compared with 8.3 basis
points on Tuesday.
 (Additional reporting by Jennifer Kwan; editing by Rob