CANADA FX DEBT-C$ boosted by Russia move and firm commodities

Wed Nov 25, 2009 4:45pm EST
 
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 * Canadian dollar at strongest close since Oct. 19
 * Russian central bank says it wants to buy C$
 * Bonds end little changed across the curve
 (Recasts)
 By Frank Pingue
 TORONTO, Nov 25 (Reuters) - Canada's dollar ended at its
highest closing level in over a month on Wednesday as commodity
prices firmed and Russia's central bank said it wants to invest
some of its reserves in the currency.
 The Canadian dollar's surge came as its U.S. counterpart
weakened, with solid U.S. economic data and a general increase
in risk appetite [FRX/] eroding some of the greenback's
safe-haven appeal.
 Russia's central bank said on Wednesday it was preparing to
invest some foreign exchange reserves in Canadian dollars to
diversify its portfolio and lessen reliance on the U.S. dollar
in international trade. [ID:nGEE5AO19O]
 A rise in gold prices to a record high and a rally in oil
prices of more than 2 percent also helped support Canada's
currency since oil and gold are both considered key experts of
Canada. [GOL/] [O/R]
 "Frankly I am a little surprised the Canadian dollar isn't
outperforming by even more than it is because when you get
right down to it oil prices are extremely favorable to the
Canadian dollar right now," said Eric Lascelles, chief
economics and rates strategist at TD Securities.
 "Simultaneously the story about Russia broadening its
reserve purchases to Canada would seem to be very much a
Canadian dollar-positive development."
 The Canadian dollar closed at C$1.0455 to the U.S. dollar,
or 95.65 U.S. cents, up 1.2 percent from C$1.0580 to the U.S.
dollar, or 94.52 U.S. cents, from Tuesday's close. It marked
the currency's highest close since Oct. 19.
 Earlier it strengthened to as high as C$1.0450 to the U.S.
dollar, or 95.69 U.S. cents, its highest since Nov. 18.
  Liquidity in financial markets now is expected to dry up
for the remainder of the week given the U.S. Thanksgiving Day
holiday on Thursday. Market players often book off on Friday as
well for an extended weekend.
 That likely means the Canadian dollar will stay in a tight
range near current levels until next week.
 "Sometimes you get a bit of jumpiness," said Lascelles.
"But I would be inclined think (it will be) flat simply because
there isn't going to be all that much market-moving news."
 BONDS FLAT
 Canadian bonds were little changed across the curve as a
rally in equity markets left investors with little demand for
more secure assets like government debt.
 The two-year Canadian government bond CA2YT=RR rose 6
Canadian cents to C$100.21 to yield 1.154 percent, while the
30-year bond CA30YT=RR was rose 10 Canadian cents to C$119.40
to yield 3.850 percent.
 The Canadian 10-year bond yield was 1.10 basis point below
its U.S. counterpart, compared with 3 basis points below on
Tuesday.
 (Editing by Frank McGurty)
 ((frank.pingue@thomsonreuters.com ; +1 416 941-8094; Reuters
Messaging: frank.pingue.reuters.com@reuters.net))
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