CANADA FX DEBT-C$ climbs to highest level since October

Mon Jul 27, 2009 4:47pm EDT
 
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 * C$ finishes at C$1.0811 to the U.S. dollar
 * Rise follows 3 percent climb last week
 * Bond prices lower across curve, follow U.S. market
 By Jennifer Kwan
 TORONTO, July 27 (Reuters) - The Canadian dollar rose to
its highest level versus the U.S. dollar in nearly 10 months on
Monday as investor appetite for riskier assets boosted the
currency.
 The Canadian dollar rose as high as C$1.0778 to the U.S.
dollar, or 92.78 U.S. cents, its highest level since early
October.
 It backed off slightly to finish at C$1.0811 to the U.S.
dollar, or 92.50 U.S. cents, up from C$1.0829 to the U.S.
dollar, or 92.34 U.S. cents, at Friday's close.
 "Overall, sentiment is still fairly positive with respect
to equities and commodities," said George Davis, chief
technical strategist at RBC Capital Markets.
 A lackluster performance on U.S. stock markets prevented
the Canadian currency from staying under the C$1.0800 level,
Davis said. Stock market direction is often seen as a barometer
of investor risk tolerance.
 Toronto's main stock index .GSPTSE closed higher as
financials rose on economic recovery hopes, while U.S. stocks
managed to eke out small gains late in the session.
 The rise in the Canadian dollar on Monday followed its
3-percent climb last week and came alongside rallies in
commodity-linked currencies such as the Australian dollar.
 Also supporting the currency was the price of oil CLc1, a
key Canadian export, which rose to settle above $68 a barrel.
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 Economic data due this week includes Canadian gross
domestic product for May and U.S. consumer confidence and
second-quarter gross domestic product.
 "We need to see some good data to keep the stock market
happy," said Steve Butler, director of foreign exchange trading
at Scotia Capital.
 "When the stock market is happy the risk is on."
 BOND PRICES LOWER
 Canadian bond prices were lower across the curve, largely
following the bigger U.S. Treasury market, where debt prices
fell on Monday on supply concerns as the Treasury is set to
auction a record $115 billion in new debt this week.
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 "It'll all be about how well they're received," Butler
said.
 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.
 The two-year Canada bond was down 2 Canadian cents at
C$99.84 to yield 1.340 percent, while the 10-year bond sagged
18 Canadian cents to C$101.45 to yield 3.573 percent.
 The 30-year bond retreated 35 Canadian cents to C$115.30 to
yield 4.075 percent. In the United States, the 30-year Treasury
yielded 4.6286 percent.
 Canadian bonds mostly outperformed U.S. Treasuries across
the curve. The Canadian 30-year bond was 55 basis points below
the U.S. 30-year yield, compared with about 49 basis points
below on Friday.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)