CANADA FX DEBT-C$ ends higher on risk-on sentiment, oil strength

Thu Oct 6, 2011 4:38pm EDT
 
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 * C$1.0378 vs U.S. dollar, or 96.36 U.S cents
 * European Central Bank action, rising oil boosts C$
 * Bond prices fall
 (Updates to close, adds analyst comment)
 By Andrea Hopkins
 TORONTO, Oct 6 (Reuters) - The Canadian dollar ended the
day stronger against its U.S. counterpart on Thursday as the
European Central Bank soothed fears of a banking crisis,
sending investors back to riskier assets.
 Global stocks rallied for a third straight day and oil
prices surged after the ECB renewed offers to aid ailing
regional banks. A lackluster U.S. jobs report that still
managed to ease fears about a new recession also provided
support. [MKTS/GLOB]
 The improved appetite for risk helped commodity-linked
currencies including the Canadian dollar, though analysts said
the positive sentiment may not last if the closely watched U.S.
payroll report due on Friday is as gloomy as expected.
 "We've had a good bounce in risk appetite and in equity
markets heading into what is a long weekend for Canada and the
U.S., and I suspect that given that two-day move upward, we may
end up seeing a bit an unwinding of that," said Mark Chandler,
head of Canadian fixed income and currency strategy at Royal
Bank of Canada.
 "We need to have very very good news to keep this in place
for tomorrow."
 The Canadian dollar CAD=D3 ended the North American
session at C$1.0378 to the U.S. dollar, or 96.36 U.S. cents, up
from Wednesday's North American session close at C$1.0402 to
the U.S. dollar, or 96.14 U.S. cents.
 The currency at one point hit C$1.0371, its strongest level
since Sept. 30.
 Chandler said rising oil prices have helped stem losses by
the Canadian dollar, which sank through parity with the U.S.
greenback in September and has mostly declined since amid
persistent fear about Europe's debt crisis and global growth.
 Oil prices jumped nearly 3 percent on Thursday, gaining for
a second straight day. [O/R]
 A Reuters poll released on Wednesday showed the Canadian
dollar is expected to recover from 13-month lows to return to
equal value with the U.S. dollar in six months' time, though
projections are not as buoyant as they were before September's
global meltdown. [CAD/POLL]
 Markets are now focused on Friday's U.S. payroll report for
September, which is expected to show a gain of 60,000 jobs,
according to a Reuters survey of analysts, after August's flat
reading.
 Canadian employment data is also due out, with 10,000 new
jobs expected. ECONCA
 A relatively strong jobs gain by Canada versus the United
States could boost the Canadian currency, said Michael Gregory,
senior economist at BMO Capital Markets.
 "We're probably going to see a Canadian job number that in
tone is going to be a little bit more robust than the U.S.
counterpart -- and that perhaps will provide a little life in
the end to the Canadian dollar," Gregory said.
 Friday is also the last day of trading before the holiday
weekend in both Canada and the United States, so volume may
peak early in the day, Gregory said.
 Bond prices were lower across the board on Thursday. The
two-year Canadian government bond CA2YT=RR lost 11.5 Canadian
cents to yield 0.961 percent, while the 10-year bond
CA10YT=RR lost 77 Canadian cents to yield 2.224 percent.
 (Editing by Jeffrey Hodgson)