CANADA FX DEBT-C$ firms; gains capped on Irish deal caution
* C$ higher at 98.43 U.S. cents
* Bonds climb across curve, follow U.S. Treasuries
By Jennifer Kwan
TORONTO, Nov 22 (Reuters) - Canada's dollar edged slightly higher against the greenback on Monday, but gains were kept in check as broader risk aversion crept back into the market as enthusiasm over an Ireland bailout faded.
The European Union and International Monetary Fund tentatively agreed to a bailout package with Ireland, with loans up to 90 billion euros to resolve its banking and budget crisis. For details, see [ID:nLDE6AL00M]
But optimism gave way to caution as investors began worrying about Ireland's Greens, which pulled the plug on the deeply unpopular coalition government on Monday by calling for a national election in January after an EU/IMF bailout package is in place.
"The return of risk aversion again emanated from the euro zone, that is, concerns about the Irish political situation going forward," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
Concerns that Ireland's debt crisis might spread to other euro zone countries such as Portugal also unnerved financial markets, said Strauss. Earlier, global markets rallied and reflected modest relief, but that enthusiasm waned. [MKTS/GLOB]
Global markets were largely weaker, as were commodity prices. [MKTS/GLOB] [O/R] [MET/L]
Still, Canada managed to eke out gains, in part, given its strong fiscal position, said Strauss.
"If we look at sovereign debt issues Canada actually stands out as one of the best G10 countries when it comes to sovereign debt issues," he said.
At 9:10 a.m. (1410 GMT), the Canadian dollar was at C$1.0160 to the U.S. dollar, or 98.43 U.S. cents, up from Friday's close at C$1.0180 to the U.S. dollar, or 98.23 U.S. cents.
Strauss said he sees a near-term technical range between C$1.0063 to the U.S. dollar, a high reached in early October and key U.S. dollar support level, and resistance at C$1.0253.
Canadian bond prices were flat to firmer, tracking U.S. Treasuries, which were steady after Ireland deal and ahead of two-year debt supply. [US/]
The two-year bond CA2YT=RR was up 4 Canadian cents to yield 1.632 percent, while the 10-year bond CA10YT=RR gained 19 Canadian cents to yield 3.120 percent. (Editing by Jeffrey Hodgson)
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