CANADA FX DEBT-C$ rallies to 2-week high as risk aversion eases

Wed Apr 29, 2009 8:55am EDT
 
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 * Canadian dollar tops 83 U.S. cents
 * Improved sentiment sparks surge in C$
 * Bond prices higher across the curve
 By Frank Pingue
 TORONTO, April 29 (Reuters) - The Canadian dollar shot to
its highest level in nearly two weeks on Wednesday morning,
helped by a rise in the price of oil, a key Canadian export,
and some signs of improved economic sentiment.
 The surge in the Canadian dollar followed similar moves by
other commodity-linked currencies like the Australian and New
Zealand dollars and reclaimed the ground lost earlier this week
when the outbreak of the swine flu virus raised concerns about
the possible economic impact.
 The Canadian dollar rose as high as C$1.2010 to the U.S.
dollar, or 83.26 U.S. cents, which marked its highest level
since April 16.
 That rally was also aided by an improved appetite for risk
after data showed a stronger-than-expected rebound in euro zone
economic sentiment in April. [ID:nLT148975]
 By 8:45 a.m. (1245 GMT) the Canadian unit had retreated
slightly to C$1.2054 to the U.S. dollar, or 82.96 U.S. cents,
but remained well up from C$1.2205 to the U.S. dollar, or 81.93
U.S. cents, at Tuesday's close.
 "The slowdown is running out of momentum, sentiment is
starting to improve ... so a lot of these things are feeding
off each other," said David Watt, senior currency strategist at
RBC Capital Markets.
 "So people aren't afraid to get long risk right now and
anything that is sensitive to risk is doing relatively well."
 Oil prices climbed back above $50 per barrel, given the
rise in global stocks markets and expectations that the U.S.
economic slowdown may be less brutal than initially thought.
[ID:nSP459932]
 Canadian bond prices were slightly higher across the curve
alongside the bigger U.S. Treasury market after U.S. data
showed the economy shrank more than expected during the first
quarter. [ID:nLT885408]
 (Editing by Jeffrey Hodgson)