CANADA FX DEBT-C$ firms as stocks, oil rise. Bonds mixed

Thu Mar 26, 2009 10:16am EDT
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* C$ pares gains as US GDP falls 6.3 pct

* Currency stuck in C$1.22-C$1.24 range, underperforms kiwi

* Long bonds up ahead of supply, short debt dips on stocks

TORONTO, March 26 (Reuters) - The Canadian dollar was slightly higher versus the U.S. currency on Thursday as strength in equity markets and the rising price of oil lent support.

At 9:45 a.m. (1345 GMT), the Canadian currency was at C$1.2272 to the U.S. dollar, or 81.49 U.S. cents, up from C$1.2285 to the U.S. dollar, or 81.40 U.S. cents, at Wednesday's close.

The currency weakened overnight as low as C$1.2329 to the U.S. dollar, or 81.11 U.S. cents, but turned higher as North American equity markets pointed to a higher open on hope that recent upbeat U.S. economic data means the economy is stabilizing.

The currency briefly pared gains after data on Thursday showed the U.S. economy contracted slightly more than had been estimated in the fourth quarter. [ID:nN25435810]

U.S. gross domestic product fell at an annual rate of 6.3 percent in the October-December quarter, compared with last month's estimate of a 6.2 percent decline. Analysts had forecast fourth-quarter GDP would contract by 6.5 percent.

"The markets are assessing whether the worse has passed in terms of U.S. growth," said Paul Ferley, assistant chief economist at Royal Bank of Canada. "Data today clearly indicated fairly sizable declines in growth in the fourth quarter of last year but the expectations are that it was the weakest point in the current recession."   Continued...