CANADA FX DEBT-C$ extends gains ahead of rate announcement

Mon Oct 19, 2009 2:05pm EDT
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 * C$ hits session high of C$1.0287 per U.S. dollar
 * Focus on Tuesday's Bank of Canada rate announcement
 * Bond prices mixed across the curve
 By Frank Pingue
 TORONTO, Oct 19 (Reuters) - The Canadian dollar was higher
against the greenback on Monday afternoon, rising on firm
commodity prices and ahead of the Bank of Canada's interest
rate announcement on Tuesday.
 The rally was aided also by a weaker U.S. dollar as
investors bet the Federal Reserve will hold U.S. interest rates
near zero well into next year.
 "It's really just recouping some of the lost ground from
Friday and over the weekend," said Eric Lascelles, chief
economics and rates strategist TD Securities.
 "And the market has managed to wrap its head around the
idea that the Bank of Canada is not hiking (rates) in the near
term and as a consequence the selling pressure in Canada has
abated now that markets are aware of that fact."
 The Bank of Canada is expected keep interest rates steady
at record lows and only tinker with its economic forecasts on
Tuesday as it waits for firmer evidence of economic recovery.
 Canada's currency rose as high as C$1.0287 to the U.S.
dollar, or 97.21 U.S. cents, on Monday, which was its highest
level since Thursday.
 By 1:50 a.m. (1750 GMT), the Canadian dollar CAD= was at
C$1.0295 to the U.S. dollar, or 97.13 U.S. cents, up from
C$1.0382 to the U.S. dollar, or 96.32 U.S. cents, at Friday's
 Helping the currency's rise were gold prices that held
above $1,050 an ounce and oil prices that steadied above $78 a
barrel. [GOL/] [O/R]
 Canadian bond prices, with no major domestic economic data
to influence trade, were mixed as investors opted to move into
stocks and other riskier assets.
 Data released on Monday showed Canadians sold C$2.71
billion of foreign bonds in August and bought the same amount
in foreign stocks. [ID:nN19523333]
 The two-year bond CA2YT=RR was up 2 Canadian cents at
C$99.24 to yield 1.620 percent, while the 30-year bond
CA30YT=RR was down 10 Canadian cents at C$116.90 to yield
3.985 percent.
 (Editing by Peter Galloway)