CANADA FX DEBT-C$ rises on euro zone rescue hopes

Thu Sep 29, 2011 8:23am EDT
 
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 *C$ rises to $1.0315 vs US$, or 96.95 U.S. cents
 *Bonds prices rise across the curve
 By Claire Sibonney
 TORONTO, Sept 29 (Reuters) - The Canadian dollar crept up
slightly against the U.S. dollar on Thursday as investors clung
to some hope that European leaders could begin to organize an
effective response to the euro zone debt crisis.
 The German parliament backed more powers for the euro zone
rescue fund with a large majority in what was Chancellor Angela
Merkel's biggest test since she took power six years ago.
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 The reaction in global equity and commodity markets was
mixed, highlighting continued uncertainty over whether Greece
could avoid a debt default.
 "Essentially the market is just trying to cling to risk-on
but having trouble," said Camilla Sutton, chief currency
strategist at Scotia Capital.
 "As every vote for the EFSF 2 gets passed that's one more
hurdle cleared, but I think generally the market recognizes
that it's not just the passing of the EFSF 2 that's the
solution; we probably need a bigger, broader solution than
that."
 At 8:05 a.m. (1205 GMT), the Canadian dollar CAD=D4 stood
at C$1.0315 versus the U.S. dollar, or 96.95 U.S. cents, up
from Wednesday's North American session close of C$1.0326
agains the greenback, or 96.84 U.S. cents.
 Sutton said the day's range for the currency should hold
between C$1.0270-C$1.0358.
 Amid the slew of upcoming North American data releases are
a final read on second quarter U.S. GDP, initial jobless
claims, home sales, manufacturing surveys and Canadian producer
and raw materials prices.
 Bond prices were higher across the curve. The two-year
Canadian government bond CA2YT=RR was up 4 Canadian cents to
yield 0.909 percent, while the 10-year bond CA10YT=RR added 7
Canadian cents to yield 2.188 percent.
  (Reporting by Claire Sibonney, Editing by Chizu Nomiyama
)