CANADA FX DEBT-Canada dollar rides momentum to higher close

Thu Oct 30, 2008 4:59pm EDT
 
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* Canadian dollar comfortably off Tuesday's multi-year low

* Currency records third straight winning session

* Bonds prices rebound from early slide to end higher

TORONTO, Oct 30 (Reuters) - The Canadian dollar finished higher versus the U.S. dollar for the third straight session on Thursday as improved market sentiment continued to help pull the currency off its recent four-year low.

Bond prices bounced back from an early selloff and finished higher across the curve on the possibility that the Bank of Canada could follow a slew of central bank rate cuts across the globe this week with another cut of its own.

The Canadian dollar closed at C$1.2180 to the U.S. dollar, or 82.10 U.S. cents, up 0.6 percent from C$1.2250 to the U.S. dollar, or 81.63 U.S. cents, at Wednesday's close.

The sudden turnaround in the dollar this week has been credited to several factors that include higher prices for Canadian exports such as oil and gold and improved market sentiment that helped lure investors back to equity markets.

The latest rally in the Canadian currency, which rose to C$1.1897 to the U.S. dollar, or 84.05 U.S. cents, overnight for its highest level since Oct. 20, was pegged more to the notion that the U.S. dollar has risen too far, too fast.

"It seems to be part of a broader trend which is the U.S. dollar starting to stumble after having such an astonishing run," said Eric Lascelles, chief economics and rates strategist at TD Securities. "So (it is) a reversal in the currency markets, where all the recognition is that perhaps the U.S. dollar has gone too far in the short term, and Canada took flight on that."   Continued...