CANADA FX DEBT-C$ ends stronger as euro, equities rally

Tue Sep 13, 2011 4:35pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

   * C$ closes stronger at C$0.9854 vs US$ or $1.0148
 * Equities rally, euro gains as risk sentiment improves
 * Bonds prices slip across the curve
 By Andrea Hopkins
 TORONTO, Sept 13 (Reuters) -  The Canadian dollar
strengthened against its U.S. counterpart on Tuesday as
investors crept back to riskier investments, pushing global
equities and the euro higher despite fears of a Greek default.
 The U.S. dollar, boosted on Monday by a flight to safety as
investors fled European stocks and the euro, eased back on
hopes Europe's top powers will supply fresh support for Greece.
Global stocks and the euro rallied even as investors remained
worried European policymakers had no plan to stem the region's
debt crisis. [MKTS/GLOB]
 A Reuters report quoting a Greek government official saying
that Greek, German and French leaders would hold a conference
call on Wednesday helped buoy the euro and underpin optimism in
European equity markets. Two German government sources
confirmed the plans. [ID:nL5E7KD29C] [ID:nB4E7K9007]
 Still, market confidence suffered another blow when Italy
had to pay the highest yield since it joined the euro zone in
1999 to sell five-year bonds. [ID:L5E7KD1TR]
 The Canadian dollar CAD=D4 ended the North American
session at C$0.9854 to the U.S. dollar, or $1.0148 U.S. cents,
up from Monday's session close at $0.9921 to the U.S. dollar,
or C$1.0080. It had dipped as low as C$0.9977 to the U.S.
dollar, or C$1.0023, in early trade.
 On Monday the Canadian dollar broke below parity for the
first time in over a month to touch its weakest level since
 "I'm actually surprised by how much it has rallied today,
just in the context that there is still a lot of uncertainty
floating around in Europe, the Italian bond auction didn't go
that well," said George Davis, chief technical strategist at
Royal Bank of Canada.
 "The one thing that sort of turned things around here is
the fact that we've seen equity markets quite buoyant today and
that seems to be the key relationship that people are focused
on. When equities sell off, that is the risk-off trade, and
that's negative for the Canadian dollar."
 The Dow Jones industrial average .DJI gained 0.40
percent, the Standard & Poor's 500 Index .SPX gained 0.91
percent, and the Nasdaq Composite Index .IXIC gained 1.49
  Toronto's main stock index .GSPTSE pushed 0.47 percent
higher as investors picked up beaten down shares of banks and
energy companies. [.TO]
 Commodities were mixed. Brent crude prices slipped, dragged
down by a downward revision to the International Energy
Agency's forecast for growth in global oil consumption due to
the struggling economy. [O/R]
 Gold prices rose nearly 1 percent on the higher equity
markets and euro rebound. [GOL/]
 U.S. Treasury prices retreated as stocks gained and damped
demand for safe-haven U.S. government debt. Canadian bond
prices followed.
 The two-year Canadian government bond CA2YT=RR was down
12 Canadian cents to yield 0.941 percent, while the 10-year
bond CA10YT=RR lost 48 Canadian cents to yield 2.195 percent.
 (Additional reporting by Claire Sibonney; Editing by Jeffrey