CANADA FX DEBT-C$ rides U.S. data to 4th straight higher close

Fri Aug 21, 2009 4:57pm EDT
 
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 * Closes at C$1.0819 to US$, or 92.43 U.S. cents
 * C$ ends week up 1.6 percent
 * U.S. housing data sparks rally
 * Bond prices lower across curve
 (Updates to close)
 TORONTO, Aug 21 (Reuters) - Canada's dollar rose for a
fourth straight session on Friday as climbing oil prices
coupled with healthier U.S. housing data to boost risk appetite
and lift the currency to a 1.6 percent gain on the week.
 After touching a one-month low at the start of the week the
domestic currency put together a string of gains on hopes that
the the global economy was on the mend.
 The latest rally versus the greenback came as 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 the housing sector was finally
pulling out of a slump [ID:nN21391628].
 Another boost came from the price of oil, a key Canadian
export, which hit a 2009 high above $74 a barrel as the upbeat
data suggested an economic recovery as well as a potential
revival in energy demand. [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."
 Canada's currency rallied to its highest level since Aug. 7
moments after the 10:00 a.m. (1400 GMT) U.S. data, touching
C$1.0762 to the U.S. dollar, or 92.92 U.S. cents.
 It backed off slightly, but still closed at C$1.0819 to the
U.S. dollar, or 92.43 U.S. cents, up from C$1.0873 to the U.S.
dollar, or 91.97 U.S. cents, at Thursday's close.
 The currency was already higher heading into the North
American session, given increased risk appetite overnight, as
data showed the euro zone economy probably crawled back to
growth this quarter. [ID:nLL381566]
 The Canadian dollar is now up about 21 percent from the
four-year low it tumbled to in early March.
 BOND PRICES LOWER
 Canadian bond prices, with no domestic data to influence a
move, ended lower as the appetite for secure assets like
government debt eased after the U.S. housing data and comments
by U.S. Federal Reserve Chairman Ben Bernanke.
 Bernanke said prospects for a return to growth in the near
term appeared good in the United States and elsewhere. The
remarks went beyond a statement from Fed policy-makers last
week when the central bank acknowledged the U.S. economy was
"leveling out." [ID:nN2139655]
 "It's all on the back of the much stronger than expected
U.S. home sales figures," said Sal Guatieri, senior economist
at BMO Capital Markets.
 "I guess Bernanke's commentary reaffirming that the
recession is likely over weighed on the bond market as well but
it's largely due to the sales numbers."
 The two-year Canadian bond ended down 19 Canadian cents at
C$99.30 to yield 1.355 percent, while the 10-year bond slipped
81 Canadian cents to C$102.17 to yield 3.485 percent.
 The 30-year bond shed C$1.35 to close at C$117.40 to yield
3.961 percent.
 Canadian bonds outperformed their U.S. counterparts across
the curve. The Canadian 30-year bond was 41.2 basis points
below the U.S. 30-year yield, versus 35.1 basis points on
Thursday.
 (Editing by Rob Wilson)