CANADA FX DEBT-C$ rises with oil price in light trade

Wed Dec 22, 2010 8:20am EST
 
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 * C$ edges higher to 98.45 U.S. cents
 * Bond prices flat to lower
 TORONTO, Dec 22 (Reuters) - Canada's dollar pushed higher
against the U.S. currency on Wednesday as the price of oil
neared a two-year high.
 The price of oil, which the Canadian dollar often tracks
because the country is a net exporter of the commodity, rose
above $90 a barrel for a third time since 2008. [O/R]
 No domestic data is due on Wednesday, but some U.S. data
throughout the morning may be influential to thinned-out
markets, including the final reading of third-quarter U.S.
gross domestic product, existing home sales for November and
the home price index for October. [ECI/US]
 At 8:05 a.m. (1305 GMT), the Canadian currency was at
C$1.0157 to the U.S. dollar, or 98.45 U.S. cents, up from
C$1.0175 to the U.S. dollar, or 98.28 U.S. cents, at Tuesday's
close.
 If it can hold its early positive bias, Canada's currency
may be able to snap its four-session down streak.
 "In the big scheme of things, the Canadian dollar remains
in a pretty good uptrend. Canada's going to grind higher but
there won't be enough gas to push through par before year end,"
said Michael O'Neill, managing director at Knightsbridge
Foreign Exchange, estimating Wednesday's daily range of
C$1.0110 and C$1.0160.
 "The trend is up with commodity prices drifting higher and
more diminished risk ... and if anyone was around to play, you
might see some risk-taking type trades going on."
 A warning from ratings agency Moody's on Tuesday that it
may cut Portugal's rating and an announcement from Fitch that
it could downgrade Greece reminded investors that euro zone
debt problems were far from over and continued to spur selling
in the euro. [MKTS/GLOB]
 However, a Portuguese newspaper reported that China was
ready to buy 4 to 5 billion euros of Portuguese sovereign debt,
offering the euro a bit of a respite. Beijing offered no
comment on the report. [ID:nLDE6BL0MW]
 Canadian stock index futures also indicated a positive
open, adding to a backdrop that could support the Canadian
currency.
 Canadian bond prices were flat to lower with the two-year
bond CA2YT=RR down 1 Canadian cent to yield 1.637 percent,
while the 10-year bond CA10YT=RR slid 25 Canadian cents to
yield 3.172 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)