CANADA FX DEBT-C$ shoots to one-week high on Buffett news

Thu Aug 25, 2011 10:11am EDT
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   * C$ rises to C$0.9811 to the U.S. dollar, or $1.0193
 * Bonds mixed
 By Ka Yan Ng
 TORONTO, Aug 25 (Reuters) - The Canadian dollar rose on
Thursday morning against a broadly weakening U.S. currency as
market sentiment shot up on news that Warren Buffett's
conglomerate Berkshire Hathaway BRKa.N will invest $5 billion
in Bank of America BAC.N.
 The move may shore up the company in the same way as
Buffett helped prop up Goldman Sachs GS.N during the
financial crisis. Investors immediately sent the euro rallying
from its New York session low against the greenback, and other
riskier currencies, including the Canadian dollar, were swept
For more see [ID:nN1E77O0ET] [FRX/]
 A build-up to U.S. Federal Reserve Chairman Ben Bernanke's
speech this Friday has kept the Canadian currency locked in a
tight range. But the Berkshire Hathaway news jolted it as high
as C$0.9791 to the U.S. dollar, or $1.02, its highest level in
more than a week.
 At 9:50 a.m. (1350 GMT), the Canadian currency CAD=D4 was
at C$0.9811 to the U.S. dollar, or $1.0193, up from C$0.9866 to
the U.S. dollar, or $1.0136, at Wednesday's close.
 The main event of the week remains Bernanke's speech on
Friday, however.
 While investors were optimistic that he would signal the
Fed is committed to take further measures if necessary to
support the U.S. economy, many doubted that he would use his
speech to launch a third round of quantitative easing.
 "I'm guessing a lot of people are in for disappointment. I
don't think there will be any major signal into a shift of
policy," said Charles St-Arnaud, Canadian economist and
currency strategist at Nomura Securities International in New
 Investors expect Bernanke to stress that the Fed still has
tools to support the U.S. economy, whose health is critical for
 St-Arnaud said the Canadian economy is in a "rough patch"
but should recover enough for the Bank of Canada to raise
interest hike rates, though at a slower pace given the Fed's
pledge to keep its rates low until 2013.
 "With all the uncertainty, the Bank of Canada will probably
be more willing to wait until January before hiking. But the
next move for them is a hike. There are still some rate cuts
priced into the market," St-Arnaud said.
 Canadian government bonds were mixed. The two-year bond
CA2YT=RR fell 3 Canadian cents to yield 1.015 percent, while
the 10-year bond CA10YT=RR edged up 30 Canadian cents to
yield 2.431 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)