CANADA FX DEBT-C$ rebounds on Europe policy hope

Mon Nov 28, 2011 9:35am EST
 
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 * C$ higher at C$1.0313 vs US$, or 96.96 U.S. cents
 * Canada bond prices lower across the curve
 By Jennifer Kwan
 TORONTO, Nov 28 (Reuters) - The Canadian dollar rebounded
from a seven-week low against its U.S. counterpart on Monday as
the euro and world stocks rallied on hopes that European
leaders would make progress on resolving the credit crisis.
 The market's mood was initially lifted by an unsourced
report in Italian daily La Stampa that suggested the
International Monetary Fund was preparing a rescue plan for
Italy worth up to 600 billion euros. For more see
ID:[nL4E7MS1BN]. This was later dismissed by an IMF
spokesperson.
 It was enough to spark a mini-rally ahead of a European
Union summit next week where market observers hope details will
emerge on how policymakers expect to resolve the debt crisis.
 "We're just having a massive retracement from last week
across currencies," said Camilla Sutton, chief currency
strategist at Scotia Capital.
 "The culmination of strong Black Friday sales in the U.S.
combined with the hope that Europe is coming towards a new plan
is temporarily providing some relief to markets."
 "Black Friday" typically marks the beginning of the U.S.
holiday shopping season, following a U.S. market holiday on
Thursday for Thanksgiving.
 At 9:13 a.m. (1413 GMT), the Canadian dollar CAD=D4 was
at C$1.0313 to the U.S. dollar, or 96.96 U.S. cents, sharply
higher from Friday's finish at C$1.0494 or 95.29 U.S. cents.
 Stronger prices for oil, a key Canadian export, and gold
also helped to lift the Canadian dollar. [O/R] [GOL/]
 "It's a reflection of general risk appetite. The commodity
currencies are doing very well," said Sutton.
 After clawing back from the C$1.05 levels breached on
Friday, Sutton said the next significant resistance levels for
the Canadian dollar are seen at C$1.0280-C$1.0380 against the
U.S. currency.
 Canadian government bond prices were lower across the
curve, following the trend in the United States that saw
Treasuries slip on Monday as optimism over the outcome of the
euro zone credit crisis weakened demand for safe-haven
government debt. [US/]
 Canada's two-year bond CA2YT=RR eased 12 Canadian cents
to yield 1.016 percent, while the 10-year bond CA10YT=RR was
down 87 Canadian cents to yield 2.209 percent.
 (Editing by James Dalgleish)