CANADA FX DEBT-C$ dips but stays range-bound, bonds gain

Thu Mar 26, 2009 5:16pm EDT
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* C$ stays in C$1.22-C$1.24 range

* Province of Ontario forecasts deficits for six years

* Bonds rise sharply, outperform at belly of curve (Updates to close, adds comments)

By Ka Yan Ng

TORONTO, March 26 (Reuters) - The Canadian dollar finished little changed versus the U.S. currency on Thursday as support for the greenback was undercut by climbing oil prices.

The price of crude oil was up 2.5 percent to above $54 a barrel, and offered support to the Canadian dollar because Canada is a major exporter of oil. Rising oil also helped the Toronto stock market's main index surge more than 2 percent.

The Canadian currency has taken direction from equity and commodity markets lately, considering them a barometer of risk sentiment, but it has not strayed out of a C$1.22-C$1.24 range against the U.S. dollar all week.

The greenback, meanwhile, advanced against the yen as investors grew more comfortable buying risky assets such as stocks and commodities, dampening the Japanese currency's safe-haven appeal. [ID:nN26511747]

"The Canadian dollar was caught between, on the one hand, stronger commodity prices supporting it, but on the other hand, a U.S. dollar that was slowly but surely gaining strength," said Matthew Strauss, senior currency strategist at RBC Capital Markets. "As a result we saw the Canadian dollar itself trading in a very tight range."   Continued...