CANADA FX DEBT-C$ edges higher as economic sentiment improves

Thu Jul 30, 2009 7:57am EDT
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 * C$ rallies to overnight high of C$1.0837
 * Upbeat data, higher commodities, fuel gain
 * Bond prices lower ahead of domestic data
 By Frank Pingue
 TORONTO, July 30 (Reuters) - Canada's dollar rose versus
the U.S. currency on Thursday morning as higher commodity
prices and upbeat economic data overseas helped to restore
investors' appetite for riskier currencies.
 The Canadian dollar rose as high as C$1.0837 to the U.S.
dollar, or 92.28 U.S. cents, overnight on the heels of two
consecutive North American sessions where it dropped from the
near 10-month high hit earlier this week.
 The latest rise was aided by data that showed euro zone
economic sentiment improved in July, the fourth improvement
from a trough in March, which helped signal that the economy
there is bottoming out. [ID:nLT1519]
 Talk of an economic recovery gave a boost to prices for
many of the commodities that Canada exports, namely oil and
 "If the market is convinced that we are in the tail end of
this recession and things are looking better for Q3 then risk
should be back on and the Canadian dollar should continue to
outperform," said Steve Butler, director of foreign exchange
trading at Scotia Capital.
 "For now anyway, until things change, the market is still
in a very positive mode and we are going to have days like
yesterday where it was corrective."
 At 7:45 a.m. (1145 GMT), the Canadian unit was at C$1.0840
to the U.S. dollar, or 92.25 U.S. cents, up from C$1.0907 to
the U.S. dollar, or 91.68 U.S. cents, at Wednesday's close.
 Also helping to boost risk appetite overnight was comments
from China's central bank, which pledged to keep loose monetary
policy to support economic recovery. [ID:nPEK357846]
 Canadian bond prices were stuck lower across the curve as
the improved economic outlook damped investors demand for more
secure assets like government debt. The early selloff ate away
at most of the gains recorded on Wednesday.
 The bonds could be influenced by Thursday's Canadian data.
June producer prices data is expected to show a rise of 0.3
percent, while raw materials prices for June are expected to
rise 3.0 percent. The data are due at 8:30 a.m.
 (Editing by Chizu Nomiyama)