CANADA FX DEBT-C$ jumps after China comments on euro zone
* C$ touches 95.12 U.S. cents
* Oil tops $73 on equity rebound
* Market heavily favors June 1 rate hike
By Claire Sibonney
TORONTO, May 27 (Reuters) - The Canadian dollar shot higher against the U.S. currency on Thursday after news that China denied a report it was looking to cut its euro zone sovereign debt holdings recovered appetite for riskier assets.
The Canadian dollar jumped more than 1 1/2 cents to hit a session high of C$1.0515, or 95.12 U.S. cents, as oil topped $73 a barrel and European stocks pushed higher. [O/R] [MKTS/GLOB]
North American equities were also set to surge at the open. [.N] [.TO]
"Canadian dollar up 1.5 percent, driven higher by increasing risk appetite after China reaffirmed that Europe is a key investment for them and lots of focus on the OECD's bullish growth forecast," said Camilla Sutton, currency strategist at Scotia Capital.
"Really just risk aversion coming much lower so G7 currency volatility coming off ... all that has given commodity currencies a nice big boost and CAD is benefiting on the back of that."
The euro, which in recent weeks has become a proxy for risk appetite, also rose on the news from Beijing. [FRX/]
At 9:03 a.m. (1303 GMT), the Canadian dollar CAD=D4 was at C$1.0560, or 94.70 U.S. cents, up from Wednesday's close at C$1.0686 to the U.S. dollar, or 93.58 U.S. cents.
Sutton said further support for the currency will be met at the 200-moving day average of C$1.0479.
Also lifting sentiment for the Canadian currency was ramped up expectations that the Bank of Canada will hike rates on June 1, with the market pricing in a near 70 percent chance on Thursday morning. [BOCWATCH] (Reporting by Claire Sibonney; Editing by Chizu Nomiyama)
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