REFILE-CANADA FX DEBT-C$ powers to strongest since Nov. 2007

Tue Jul 26, 2011 9:55am EDT
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(Refiles to include reference to Chicago's International Monetary Market in paragraph 11)

* C$ hits high of C$0.9412 vs US$, or $1.0625

* Bonds flat, outperform US Treasuries

By Claire Sibonney

TORONTO, July 26 (Reuters) - The Canadian dollar rose to its best level in more than three and a half years against the U.S. dollar on Tuesday, as debt fears in the United States continued to slam the greenback.

The currency CAD=D4 climbed as high as C$0.9412 to the U.S. dollar, or $1.0625, its strongest level since November 2007, when it hit a modern-day high.

The U.S. dollar fell across the board, plunging to a record low against the Swiss franc, as a speech by U.S. President Barack Obama gave no sign of a swift breakthrough in deadlocked talks to raise the U.S. debt ceiling. [FRX/]

Commodity prices such as oil also rallied on a weaker U.S. dollar, though investors shrugged off fears that a U.S. default would undermine the appetite for riskier assets, while a run of strong earning reports further boosted market sentiment.

"The political brinksmanship that's being played out south of the border is clearly having an impact on the U.S. dollar," said Jack Spitz, managing director of foreign exchange at National Bank Financial, noting talk of central banks' reserves diversifying out of the U.S. dollar and into other currencies, such as Canada's.   Continued...