CANADA FX DEBT-C$ higher after CPI; commodities offer support

Wed Nov 18, 2009 8:13am EST
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 * C$ higher after overnight rally
 * Adds to gains after data; CPI up after 4-month decline
 * Bond prices down across the curve
 By Frank Pingue
 TORONTO, Nov 18 (Reuters) - Canada's currency drew support
from lofty commodity prices and rose against the U.S. dollar on
Wednesday, but showed little reaction to inflation data that is
not expected to draw concern from the Bank of Canada.
 The currency was already higher ahead of the data given
overnight gains attributed to record high gold prices and oil
prices that moved back above $80 a barrel. [GOL/] [O/R] Both
are key Canadian exports that influence the Canadian dollar.
 It tacked on minor gains shortly after data showed consumer
prices in Canada rose in October. But the report is not
expected to sway the Bank of Canada from holding its key
interest rate at a record low 0.25 percent until mid-2010.
 The Canadian dollar rose to a session high of C$1.0450 to
the U.S. dollar, or 95.69 U.S. cents, shortly after the report
from its pre-data level around C$1.0469 to the U.S. dollar, or
95.52 U.S. cents.
 "The lack of substantial movement in financial markets
speaks to the modest nature of the upside surprise," said Eric
Lascelles, chief economics and rates strategist at TD
Securities. "There is nothing hugely shocking here and I don't
think there is any major implication for the central bank."
 By 8:11 a.m. (1311 GMT), the Canadian unit was at C$1.0468
to the U.S. dollar, or 95.53 U.S. cents, up from C$1.0511 to
the U.S. dollar, or 95.14 U.S. cents, at Tuesday's close.
 Also helping to prop up the Canadian dollar was investor
hunger for risk as the year end approached.
 Expectations that U.S. interest rates will remain
exceptionally low for some time have encouraged global
investors to look for better returns from riskier trades such
high-yielding currencies, commodities and stocks.
 Domestic bond prices were lower across the curve given the
greater appetite for risk, which was expected to give the
resource-heavy S&P/TSX composite index .GSPTSE a boost.
 (Editing by Jeffrey Hodgson)