CANADA FX DEBT-C$ storms back to post slim gain

Tue Oct 28, 2008 4:28pm EDT
 
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* Canadian dollar rallies off 4-year low versus greenback

* Equity rally prompts demand for risk oriented currencies

* Bond prices dragged down in face of rallying stocks

By Frank Pingue

TORONTO, Oct 28 (Reuters) - The Canadian dollar rallied off a four-year low to close slightly higher versus the U.S. dollar in a choppy session on Tuesday during which investors flocked to the currency as equity markets rallied.

Bond prices ended down across the curve as a slew of bargain-hunting gave a jolt to global stock markets and left little interest in government debt ahead of a widely expected rate cut by the U.S. Federal Reserve on Wednesday.

The Canadian dollar closed at C$1.2827 to the U.S. dollar, or 77.96 U.S. cents, up from C$1.2889 to the U.S. dollar, or 77.58 U.S. cents, at Monday's close.

After a steep overnight fall in the currency to C$1.3019 to the U.S. dollar, or 76.81 U.S. cents, its lowest level since September 2004, the Canadian dollar spent the North American session bouncing around in a wide range of C$1.2995 to the U.S. dollar to C$1.2797 to the U.S. dollar.

The rally in the Canadian dollar from its overnight low was aided largely by a rally in global stock markets and a slightly improved overall market sentiment.   Continued...