CANADA FX DEBT-C$ hits highest level since Oct 2008

Mon Jul 27, 2009 8:06am EDT
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 * Greater risk appetite sparks C$ rally
 * Rise follows 3 percent rise last week
 * Bond prices stuck lower across curve
 By Frank Pingue
 TORONTO, July 27 (Reuters) - The Canadian dollar rallied to
its highest level in over nine months versus the U.S. dollar on
Monday morning as a general appetite for riskier assets helped
support commodity-linked currencies.
 The Canadian dollar rose as high as C$1.0778 to the U.S.
dollar, or 92.78 U.S. cents, which marked its highest level
since Oct. 3. It backed off slightly but remained above the
previous session's close.
 "It's part of a broader risk appetite move that is
supporting the Canadian dollar," said Matthew Strauss, senior
currency strategist at RBC Capital Markets.
 "We're just seeing a general follow through from last week.
It's a continued belief that we've seen the worst of the crisis
and that a slow recovery is materializing."
 At 8:00 a.m. (1200 GMT), the Canadian unit was at C$1.0792
to the U.S. dollar, or 92.66 U.S. cents, up from C$1.0829 to
the U.S. dollar, or 92.34 U.S. cents, at Friday's close.
 The rise in the domestic currency follows its 3.1 percent
climb last week and came alongside rallies in commodity-linked
currencies like the Australian dollar.
 Oil prices rose to their highest level in more than three
weeks, while gold shot to a new 6-1/2 week high. The domestic
currency's direction is often influenced by oil and gold prices
given the nature of Canada's exports.
 Canadian bond prices, with no domestic data to consider,
were pinned lower across the curve as the recent arrival of
upbeat earnings results lessened the appeal of more secure
assets like government debt.
 With no domestic data due out until later in the week,
Canadian bond prices will likely take their direction from the
bigger U.S. Treasury market and from equities.
 (Editing by Theodore d'Afflisio)