CANADA FX DEBT-C$ pushes higher on BHP bid for Potash

Tue Aug 17, 2010 8:23am EDT
 
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   * Potash Corp rejects BHP Billiton's $39 bln offer
 * C$ rises to 96.37 U.S. cents
 * Bond prices slip before data, U.S. Fed's bond buying
 TORONTO, Aug 17 (Reuters) - The Canadian dollar got a boost
against the U.S. currency on Tuesday as market focus turned to
a rejected bid by Canadian fertilizer group Potash Corp of
Saskatchewan by BHP Billiton.
 Among a slew of overnight and early North American
developments, market focus was on Potash Corp POT.TO and its
board's rejection of BHP Billiton's BHP.AX BLT.L
unsolicited $38.6 billion offer.
 The world's largest fertilizer company termed the proposal
as "grossly inadequate," and adopted a shareholder rights plan.
 [ID:nSGE67G0DT] [ID:nN08269113]
 "The market seems to be focused more on BHP's bid, (though)
rejected, for Potash. It's a significant upside potential for
the Canadian dollar (on) the inference that a deal this size
could be in play for one of Canada's biggest companies," said
Jack Spitz, managing director of foreign exchange at National
Bank Financial.
 In this case, the Canadian dollar is poised to firm as the
foreign company would need the local currency to finance an
acquisition.
 At 8 a.m. (1200 GMT), the Canadian dollar CAD=D4 was at
C$1.0377 to the U.S. dollar, or 96.37 U.S. cents, not far off
the session high at C$1.0365 to the U.S. dollar, or 96.48 U.S.
cents.
 It was up from C$1.0446 to the U.S. dollar, or 95.73 U.S.
cents, at Monday's close.
 Canadian government bond prices were lower ahead of the
day's data, while the market was also on guard for the U.S.
Federal Reserve to kick off the first of a series of
bond-buying sprees.  [US/]
 Canada's two-year bond CA2YT=RR was off 4 Canadian cents
to yield 1.369 percent, while the 10-year bond CA10YT=RR fell
25 Canadian cents to yield 2.955 percent.
 Other potential factors in trade on Tuesday could be from a
debt auction by Ireland as yield spreads for peripheral euro
zone economies remained under pressure, though Spain sold 12-
and 18-month T-bills at reduced yields compared with last
month. [ID:nLDE67F0BJ] [ID:nMDT009235]
 North American data for the session includes Canadian
manufacturing sales for June and securities transactions for
the same month, while July housing-starts data is due from the
United States.
 (Reporting by Ka Yan Ng; Editing by Theodore d'Afflisio)