CANADA FX DEBT-C$ pares gains as oil price eases; bonds up

Fri Jun 26, 2009 12:03pm EDT
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* C$ at 86.72 U.S. cents

* Bonds advance as equities drift lower

* Canada to boost bond issuance (Adds details)

TORONTO, June 26 (Reuters) - The Canadian dollar cut early gains against the U.S. currency on Friday morning as oil prices turned lower and market players looked to consolidate positions heading into the weekend.

Early action saw the currency boosted by firm commodity prices, while the greenback weakened on a revival in investors' thirst for riskier assets. The currency reached as high as C$1.1445 to the U.S. dollar, or 87.37 U.S. cents.

However, the currency gave up much of those gains as the price of oil, a key Canadian export, fell to around $69 a barrel. Equity markets also came off session highs, taking a bite out of risk appetite.

At 11:30 a.m. (1530 GMT), the Canadian dollar was at C$1.1531 to the U.S. dollar, or 86.72 U.S. cents, up from C$1.1562 to the U.S. dollar, or 86.49 U.S. cents, at Thursday's close.

"I just think the way that equities have been slowly drifting off, it's been a bit of a consolidation day. We've probably seen a good part of the range for this session," said Steve Butler, director of foreign exchange trading at Scotia Capital.

"We've had a couple of topsy-turvy days, but really no direction again this week."   Continued...