CANADA FX DEBT-C$ hits six-week high as world stocks climb
* C$ climbs as high as 93.81 U.S. cents
* Touches highest level since early August
* Bonds flat to higher, follow U.S. Treasuries
By Jennifer Kwan
TORONTO, Sept 16 (Reuters) - The Canadian dollar touched a six-week high against the U.S. dollar on Wednesday, as the greenback hit a one-year low against a basket of currencies and higher global stocks caused investors to flock to assets seen as riskier.
Events and data this week have helped to boost investor faith about the pace of economic recovery, lighting a fire under world stocks and weakening the U.S. dollar. [FRX/] [MKTS/GLOB]
The Canadian unit raced up to C$1.0660 to the U.S. dollar, or 93.81 U.S. cents, in the overnight session to touch its highest level since Aug. 4.
"U.S. dollar weakness is a huge undercurrent to this trend," said Eric Lascelles, chief economics and rates strategist, TD Securities.
At 8:08 a.m. (1208 GMT), the Canadian dollar was at C$1.0695 to the U.S. dollar, or 93.50 U.S. cents, up from Tuesday's close at C$1.0714 to the U.S. dollar, or 93.34 U.S. cents.
The move higher extended gains in the previous session on robust U.S. retail sales and manufacturing data and comments by U.S. Federal Reserve Chairman Ben Bernanke.
Bernanke said the recession likely has ended but that recovery will 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 favours the risk-loving trade and as a result the safe-haven bid for the U.S. dollar has been declining," said Lascelles.
The Canadian currency may also be benefiting from comments by the Bloc Quebecois on Tuesday, which suggested Canada's minority Conservative government will survive a budget vote in Parliament this week.
"That has taken some of the speculative money that would've sat on the sidelines and put it back into the Canadian dollar," said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
Oil prices CLc1, a key Canadian export, were weak on Wednesday, while gold prices soared above $1,000 an ounce. [O/R] [MET/]
The Canadian currency is often swayed by the direction of stock markets and commodity prices, each seen as a yardstick of appetite for risk.
Canadian bond prices were flat to slightly higher, following the big U.S. Treasury market where prices were boosted by Bernanke's comments, but trade was cautious ahead of key U.S. inflation data. [ID:nLG211920]
The two-year bond CA2YT=RR was flat, up 2 Canadian cents to C$99.55 to yield 1.234 percent, while the 10-year bond CA10YT=RR rose 23 Canadian cents to C$103.40 to yield 3.36 percent. The 30-year bond CA30YT=RR rose 25 Canadian cents to C$118.85 to yield 3.882 percent. (Editing by Jeffrey Hodgson)
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