CANADA FX DEBT-Oil aids C$ climb; market shrugs off Carney

Wed Jun 16, 2010 1:15pm EDT
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 * C$ touches high of C$1.0224 to the U.S. dollar
 * Bond prices higher across the curve
 (Recasts, adds Bank of Canada, quotes)
 By Jennifer Kwan
 TORONTO, June 16 (Reuters) - The Canadian dollar rose to
the highest level in a month against the U.S. currency on
Wednesday, helped by higher oil prices, as the market largely
shrugged off comments by Bank of Canada Governor Mark Carney.
 The Canadian dollar rose as high as C$1.0224 to the U.S.
dollar, or 97.81 U.S. cents, its strongest level since May 14.
 The currency got much of its thrust from a move in the oil
price to above $77 a barrel, said Matthew Strauss, senior
currency strategist at RBC Capital Markets. The rise was also
facilitated by the currency's ability to punch through key
technical levels.
 "The technical test of support levels at C$1.0245 has been
broken and now it is falling back to C$1.0225," Strauss said.
 But by 12:42 p.m. (1642 GMT), the Canadian dollar CAD=D4
had backed off to C$1.0245 to the U.S. dollar, or 97.61 U.S.
cents, still up from C$1.0251, or 97.55 U.S. cents, at
Tuesday's close.
 In a speech in Prince Edward Island, Carney cautioned
markets not to take another Bank of Canada interest rate hike
for granted, saying volatile global conditions mean no
particular path for monetary policy is preordained.
 "Nothing really new or no new insight into monetary policy
thinking from the Bank of Canada perspective," Strauss said of
the speech, adding Carney's comments "provided no direction"
for the Canadian dollar.
 The central bank raised its key rate by a quarter point on
June 1 to 0.5 percent, becoming the first central bank in the
Group of Seven wealthy countries to do so. Markets are pricing
in a second rate hike on July 20. [BOCWATCH]
 Strauss said the next key technical levels for the Canadian
dollar are C$1.0225 to the U.S. dollar and C$1.0111. On the top
side, analysts would be eyeing C$1.0328.
 Canadian bond prices edged higher across the curve,
tracking U.S. Treasuries, which benefited from modest
safe-haven flows after data showed U.S. housing starts in May
fell more than expected to a five-month low. [US/]
 The two-year government bond CA2YT=RR was up 5 Canadian
cents to yield 1.803 percent, while the 10-year bond
CA10YT=RR jumped 35 Canadian cents to yield 3.386 percent.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)