CANADA FX DEBT-C$ holds gains after Liberals back Canada budget

Wed Jan 28, 2009 2:04pm EST
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* C$ sticks near highest level since Jan. 12

* Higher commodity prices and weak US$ aiding C$'s gain

* Little reaction to priced-in Canada political news

* Bonds lower as stocks gain, looming supply concerns

By Frank Pingue

TORONTO, Jan 28 (Reuters) - Canada's dollar held near a two-week high on Wednesday after the country's opposition Liberals made a widely expected decision to support the federal budget and prevent the fall of the ruling Conservatives.

The currency had earlier rallied as much as 2 percent to C$1.2025 or 83.16 U.S. cents, its highest level since Jan. 12, helped by firmer prices for key Canadian exports like oil and broader U.S. dollar weakness.

News that the Liberals agreed to support the federal budget if certain conditions are met [ID:nN28521262] did not trigger any substantial moves in the domestic currency.

Even if Liberal leader Michael Ignatieff decided to vote against the budget, some experts said a selloff in the Canadian currency was unlikely given improved global sentiment.   Continued...