CANADA FX DEBT-C$ tips higher on firmer equities, bonds flat

Mon Aug 23, 2010 8:34am EDT
 
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   * C$ edges up to 95.59 U.S. cents
 * Bonds little changed
 TORONTO, Aug 23 (Reuters) - Canada's dollar was higher
against the U.S. currency on Monday morning, helped by a firmer
tone to equity markets and moderate gains in the price of oil.
 U.S. and Canadian equity market futures suggested a rise at
the open, as sentiment was lifted by several potential mergers
and deals. Overseas stock markets were also up.  [MKTS/GLOB]
[ID:nN23188017]  <0#SXF:> SPc1DJc1NDc1
 The price of oil rebounded from a six-week low to top $74 a
barrel, giving a lift to Canada's commodity-linked currency.
Canada is a net exporter of oil, and the currency often tracks
the movement in oil prices.
 The currency begins the week a little firmer after last
week's swing between C$1.0247-C$1.0515 as it digested a
takeover bid for Potash Corp by BHP Billiton as well as a slate
of disappointing economic data from around the world.
[ID:nSGE67J03V] ECONCA
 "After last week, everyone sort of took a deep breath and
is (trying to) reevalutate the situation. Maybe there seems to
be a touch more optimism today," said David Tulk, senior macro
strategist at TD Securities.
 At 8:15 a.m. (1415 GMT), Canada's currency was at C$1.0461
to the U.S. dollar, or 95.59 U.S. cents, up from C$1.0488, or
95.35 U.S. cents, at Friday's close. Currency watchers put the
day's trading range between C$1.0400-C$1.0500.
 No domestic data is on tap on Monday, leaving few catalysts
to drive government bonds, until Tuesday when retail sales for
June are published. A speech by Bank of Canada Deputy Governor
John Murray will also be closely monitored for clues on the
path of future interest rates ahead of the next rate decision
on Sept. 8.
 "This will give them an opporturnity to actually signal
their intentions going into the meeting. It's the last
opportunity they have to say something publicly," said Tulk.
 A poll conducted by Reuters on Friday showed Canada's
primary securities dealers still predict the central bank will
raise interest rates for a third time this year in September,
but uninspiring economic data has cast doubt on the pace of
future increases. [ID:nN20198572]  [CA/POLL]
 Markets have been pricing in less certainty, however.
Yields on overnight index swaps, which trade based on
expectations for the Bank of Canada's key policy rate, showed
sentiment was divided over the likelihood of a rate increase
next month.
 Canada's two-year bond CA2YT=RR dipped 1 Canadian cent to
yield 1.304 percent, while the 10-year bond CA10YT=RR was off
1 Canadian cent to yield 2.928 percent.
 (Reporting by Ka Yan Ng; Editing by Chizu Nomiyama)