CANADA FX DEBT-C$ surges on commodity-fueled rally

Wed Oct 29, 2008 4:33pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* Canadian dollar rebounds from Tuesday's 4-year low

* Higher commodity prices support currency's rise

* Short-end bond prices up after interest rate cuts

By Frank Pingue

TORONTO, Oct 29 (Reuters) - The Canadian dollar rallied more than 3 U.S. cents higher on Wednesday as a jump in prices for key commodities and an extended rebound in equity markets lifted the currency to its highest level in a week.

Domestic bond prices were boosted slightly on the short end of the curve after interest rate cuts in China and the United States sparked demand for more secure government debt, but the rise was muted given the rally in equity markets.

The Canadian dollar closed at C$1.2250 to the U.S. dollar, or 81.63 U.S. cents, up 4.7 percent from C$1.2827 to the U.S. dollar, or 77.96 U.S. at Tuesday's close.

A rally that began late in Tuesday's North American session carried on overnight and gathered momentum on Wednesday as prices for Canadian exports such as oil and gold moved further off their recent lows, while improved market sentiment helped lure investors back to equity markets.

The Canadian currency rallied as high as C$1.2126 to the U.S. dollar, or 82.47 U.S. cents, which helped it reclaim a chunk of the big losses suffered in the past month.   Continued...