CANADA FX DEBT-C$ firms near 3-1/2 yr high as debt fears hit US$

Mon Jul 25, 2011 4:25pm EDT
 
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* C$ ends session at C$0.9458 to US$, or $1.0573

* Near 3-1/2 year high as U.S. debt woes persist

* Canada currency taking on safe-haven character

* Bond prices softer, but outperform Treasuries (Updates to close, adds analyst comments, details)

By Andrea Hopkins

TORONTO, July 25 (Reuters) - The Canadian dollar finished stronger against its U.S. counterpart on Monday, within sight of last week's 3-1/2 year high, as a stalemate in U.S. debt talks boosted Canada's flight-to-safety status.

The breakdown in U.S. budget talks has fueled demand for perceived safe-haven currencies, as the greenback hit a record low versus the Swiss franc and a four-month trough against the yen. [FRX/]

"In the absence of any debt deal in the U.S., markets are still very nervous and with that nervousness Canada is continuing to be one of the favorites," said Steve Butler, director of foreign exchange trading at Scotia Capital.

"We do get a bit of short-covering toward the end of the day as people get a little bit leery going home too long Canada at 3-1/2 year highs, but I think we'll be trading down towards the mid 93s later in the week all things being equal."   Continued...