CANADA FX DEBT-U.S. confidence data drives sharp C$ rally

Tue May 26, 2009 4:51pm EDT
 
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* C$ hits highest level since Oct. 8

* Upbeat U.S. data credited for rally

* Bond prices end down across curve (Recasts and adds details)

By Frank Pingue

TORONTO, May 26 (Reuters) - Canada's currency closed higher versus the greenback on Tuesday and touched its loftiest level in more than seven months, spurred by a rise in oil prices and by upbeat U.S. economic data that whetted investor appetite for risk.

Early in the session the Canadian dollar was given a boost after U.S. data showed that consumer confidence rose in May to its highest level in eight months. [ID:nN26484791]

That allowed the Canadian dollar to recapture the losses it suffered overnight and gave it enough momentum to rise late in the session as high as C$1.1163 to the U.S. dollar, or 89.58 U.S. cents, its highest level since Oct. 8.

The confidence data was the latest of several reports in the past few weeks to signal an improving U.S. economy and to weigh on the safe-haven status of the greenback, allowing the Canadian dollar to rally from the four-year low it hit in early March.

"We are seeing some risk aversion being taken off the table so that's taken some of the bid tone out of the U.S. dollar," said Charmaine Buskas, senior economics strategist at TD Securities.   Continued...