CANADA FX DEBT-C$ rises with commodities, stays rangebound
* C$ rises to C$0.9706 per US$, or $1.0303
* Stays within range of C$0.9700-C$0.9760
* Bond prices fall
By John McCrank
TORONTO, May 18 (Reuters) - The Canadian dollar edged higher against the U.S. dollar on Wednesday, supported by rising oil prices and a more positive tone in equity markets.
The price of U.S. crude oil rose 3 percent to settle above $100 a barrel, helped by a weekly U.S. government report that showed refinery usage was up, denting inventories and suggesting stronger demand. [O/R]
Commodities strengthened in general as investors rushed in at bargain prices after big declines in recent weeks. The Reuters-Jefferies CRB index .CRB, a global benchmark that covers a basket of 19 commodities, rose 2.3 percent for its biggest one-day gain since March 17.
The resource-heavy Toronto Stock Exchange gained 1.24 percent on the day. [ID:nTZOIGE71Q]
Canada is a major exporter of oil and other commodities and its currency is often influenced by moves in their prices.
The Canadian dollar "hasn't benefited as much as one would have expected from the push in oil to $100 and stronger equities," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.
She said it was a quiet day overall in the markets with tight ranges for most currencies.
The Canadian dollar CAD=D4 ended the North American session at C$0.9706 to the U.S. dollar, or $1.0303, up from Tuesday's finish at C$0.9726 to the U.S. dollar, or $1.0282.
The currency stayed within a range of C$0.9700 to C$0.9760.
The Canadian dollar has been on a mostly downward trend versus the greenback since it hit a 3-1/2 year high on April 29.
Concerns about the state of the global economy as a result of U.S. fiscal problems and European sovereign debt worries have made investors question the demand outlook for commodities. The Canadian dollar, as well as other commodity-linked currencies like the Australian dollar, have softened as a result.
While Canada's fiscal situation is seen as sound, Bank of Canada Governor Mark Carney reiterated in a speech this week the litany of risks to the domestic economy from outside sources.
That prompted Toronto-Dominion Bank to push out its forecast for the next central bank rate increase to September from July.
"There is no urgency for the Bank of Canada to hike right now," Mazen Issa, macro strategist at TD Securities.
"The bank is more willing to take on inflation risk than to risk having any sort of significant downside from the headwinds that are facing the market."
BOND PRICES LOWER
Canadian bond prices fell as investors bet on equities rather than the relatively safer, but less lucrative, government debt.
Canada's two-year bond CA2YT=RR fell 7 Canadian cents to yield 1.679 percent, while the 10-year bond CA10YT=RR was off 55 Canadian cents to yield 3.229 percent.
On the domestic data front, Canada's composite leading indicator climbed 0.8 percent in April from March. Other data showed wholesale trade inched up 0.1 percent in March from February as declines in several sectors offset partial gains in the auto sector. [ID:nSCLIGE7CB] [ID:nSCLIGE7CC]
On Friday, Statistics Canada releases inflation data for April and retail sales for March.
The figures are among the few last before the Bank of Canada's next interest rate decision on May 31, when it is expected to stand pat at 1 percent. (Reporting by John McCrank; editing by Rob Wilson)
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