CANADA FX DEBT-C$ rises, risk appetite aided by Spain auction

Thu Jun 17, 2010 7:59am EDT
 
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 * C$ higher at C$1.0238, or 97.68 U.S. cents
 * Bond prices weaker across curve
 By Jennifer Kwan
 TORONTO, June 17 (Reuters) - The Canadian dollar edged
higher on Thursday as investors were seen taking on more risk
following Spanish bond issues that drew strong demand, keeping
concerns about Europe's debt troubles at bay.
 Spain sold 3.5 billion euros of 10- and 30-year government
bonds, at the top of its target range, though yields were high.
The well covered auction helped narrow the spread of Spanish
yields over benchmark Bunds from an earlier euro lifetime high.
[MKTS/GLOB]
 "That helped appetite for risk," Adam Cole, global head of
FX strategy at RBC Capital Markets in London, said of the
auctions.
 "(The Canadian dollar) is really being driven by better
appetite for risk rather than anything domestic in Canada."
 At 7:34 a.m. (1134 GMT), the Canadian currency was at
C$1.0238 to the U.S. dollar, or 97.68 U.S. cents, slightly
firmer than Wednesday's finish at C$1.0254 to the U.S. dollar,
or 97.52 U.S. cents.
 Another factor helping investor sentiment was news the
Swiss National Bank backed off its pledge to fight an excessive
rise of the franc decisively, added Cole. [ID:nLDE65E1W2]
 Overnight, the currency failed to punch through its
one-month high of C$1.0224 to the U.S. dollar, or 97.81 U.S.
cents, which it reached on Wednesday.
 Cole said the next key technical levels for the currency
are around C$1.0111 to the U.S. dollar, or 98.90 U.S. cents. On
the flip side, analysts would be eyeing C$1.0361.
 Canadian bond prices moved lower across the curve, tracking
U.S. Treasury issues as demand for safe-haven government debt
eased after Spain's successful bond auctions.  [US/]
 The two-year government bond CA2YT=RR sagged 2 Canadian
cents to yield 1.781 percent, while the 10-year bond
CA10YT=RR fell 20 Canadian cents to yield 3.381 percent.
 (Editing by Theodore d'Afflisio)