CANADA FX DEBT-C$ surges to highest level since Jan. 9

Thu Apr 30, 2009 8:23am EDT
 
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 * C$ rallies as high as 84.29 U.S. cents
 * Improved market sentiment drives gain
 * Bond prices stuck lower across the curve
 (Adds details)
 By Frank Pingue
 TORONTO, April 30 (Reuters) - The Canadian dollar charged
to its highest level in nearly four months on Thursday as
improved market sentiment helped the domestic currency break
through a key technical level.
 Canada's currency rallied overnight as high as C$1.1864 to
the U.S. dollar, or 84.29 U.S. cents, its highest level since
Jan. 9, outperforming the other commodity-based currencies like
the Australian and New Zealand dollars.
 By 8:05 a.m. (1205 GMT), the currency retreated slightly to
C$1.1899 to the U.S. dollar, or 84.04 U.S. cents, still up
comfortably from C$1.2030 to the U.S. dollar, or 83.13 U.S.
cents, at Wednesday's close.
 The domestic currency had followed other commodity-based
currencies higher on Wednesday but it was unable to strengthen
past C$1.1990, 83.40 U.S. cents, despite several attempts.
 "A continuation of risk appetite overnight gave the market
enough reason to push through that (level) and once it broke
through C$1.1990 it played catch up with Aussie dollar and as a
result it outperformed overnight," said Matthew Strauss, senior
currency strategist RBC Capital Markets.
 "It just seems the market is looking and reacting to
positive data and at the moment events or data that contradict
that are simply ignored or only have a minimal impact."
 Sentiment was upbeat overnight as global equities rallied
as investors bet on a stabilization of the world economy and
took heart from some upbeat corporate earnings.
 BOND PRICES LOWER
 Domestic bond prices were lower across the curve alongside
the bigger U.S. Treasury market, adding to the skid during the
previous session as U.S. stock index futures were pointing to a
rise of more than 1 percent at the open. [ID:nN30501421]
 Futures were suggesting a higher open given the rash of
better-than-expected profits and the U.S. Federal Reserve's
comments on Wednesday that the pace of economic deterioration
in the United States appeared to be slowing. [ID:nN29410693]
 "Overseas equity markets were up appreciably and U.S. stock
index futures are pointing sharply higher," said Sal Guatieri,
senior economist at BMO Capital Markets. "It's all on the Fed's
feel-good press statement that suggests the recession may be
ebbing."
 At 8:30 a.m. Canadian gross domestic product figures by
industry for February will be released along with reports on
producer prices raw materials for March.
 The two-year Canada bond was down 2 Canadian cents at
C$100.53 to yield 0.991 percent, while the 10-year dropped 17
Canadian cents to C$105.50 to yield 3.110 percent.
 The 30-year bond was off 30 Canadian cents at C$119.75 to
yield 3.844 percent. In the United States, the 30-year Treasury
yielded 4.069 percent.