CANADA FX DEBT-C$ hits 2-week high, bonds surge after Fed

Wed Mar 18, 2009 5:27pm EDT
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* Fed decision to buy long-dated debt boosts C$, bonds

* C$ closes above 80 cents for first time since Feb. 24

* Odds rise that BoC may also try unorthodox measures (Updates to close with further comment, details)

By Ka Yan Ng

TORONTO, March 18 (Reuters) - The Canadian dollar finished above 80 U.S. cents for the first time in more than two weeks on Wednesday and bonds surged after the U.S. Federal Reserve said it would buy longer-term Treasuries.

The Canadian dollar finished sharply higher at C$1.2463 to the U.S. dollar, or 80.24 U.S. cents, against C$1.2688 to the U.S. dollar, or 78.81 U.S. cents, at Tuesday's close. The last time the currency closed above 80 U.S. cents was on Feb. 24.

At one point, the currency rallied as high as C$1.2430 to the U.S. dollar, or 80.45 U.S. cents.

Doug Porter, deputy chief economist at BMO Capital Markets, said the market has "seen no shades of grey" following the Fed's decision to buy up to $300 billion worth of longer-term U.S. government debt and expand purchases of mortgage-related debt to help ease credit market conditions.

The Fed also kept its target for overnight interest rates in a zero to 0.25 percent range. [ID:nN18343369]   Continued...