CANADA FX DEBT-C$ hits 2-week high on economic optimism

Fri Aug 21, 2009 11:14am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

 * C$ hits C$1.0762 to the U.S. dollar
 * Move follows U.S. housing data
 * Bond prices lower across curve
 (Adds details)
 By Frank Pingue
 TORONTO, Aug 21 (Reuters) - The Canadian dollar rallied to
its highest level in two weeks against the greenback on Friday
as a rise in oil prices to a 2009 high and healthier U.S.
housing data helped boost risk appetite.
 The U.S. data showed sales of previously owned homes in
July notched their fastest pace in nearly two years, which the
market interpreted as the strongest sign yet that housing was
pulling out of a slump [ID:nN21391628]
 Another boost to the currency came from the price of oil, a
key Canadian export, which topped $74 a barrel and is on track
for a meaty weekly gain. [ID:nSIN143777]
 "The housing data came in with a strong upside surprise and
we immediately saw equities reacting to that, and the Canadian
dollar followed suit as one of the commodity-based currencies,"
said Matthew Strauss, senior currency strategist RBC Capital
Markets. "So you have two very strong supportive factors with
higher oil prices and stronger equity increases."
 At 11:05 a.m. (1505 GMT), the Canadian unit was at C$1.0812
to the U.S. dollar, or 92.49 U.S. cents, up from C$1.0873 or
91.97 U.S. cents at Thursday's close.
 The Canadian dollar had rallied as high as C$1.0762 to the
U.S. dollar, or 92.92 U.S. cents, moments after the 10:00 a.m.
housing data before backing off slightly. That marked its
highest level since Aug. 7.
 The currency was already higher on the day, given healthy
risk appetite overnight, as data showed the euro zone economy
probably crawled back to growth this quarter after its worst
recession on record. [ID:nLL381566]
 The trek higher by the domestic currency also came as U.S.
Federal Reserve Chairman Ben Bernanke said the prospects for a
return to growth in the near-term appeared good both in the
U.S. and elsewhere. [ID:nLL536966]
 Strauss said Bernanke's comments did not offer "anything
new" and did not credit the central banker for the rise by the
domestic currency.
 Canada's dollar is coming off its third straight higher
close versus the U.S. dollar after falling earlier this week to
its lowest level since July 20.
 BOND PRICES LOWER
 Canadian bond prices were lower across the curve, tracking
the move in the bigger U.S. Treasury market, given the existing
home sales data that came in better than expected.
 The two-year Canadian bond was down 7 Canadian cents at
C$99.41 to yield 1.297 percent, while the 10-year bond slipped
38 Canadian cents to C$102.60 to yield 3.434 percent.
 The 30-year bond was off 75 Canadian cents at C$118.00 to
yield 3.929 percent.
 (Editing by Rob Wilson)