3 Min Read
* C$ rises to $1.0262 vs US$, or 97.45 U.S. cents
* US data buoys hope for economic recovery
* Bonds prices fall
By Andrea Hopkins
TORONTO, Sept 29 (Reuters) - The Canadian dollar firmed against its U.S. counterpart on Thursday morning as U.S. data showed an upward revision in economic growth and fewer claims for jobless benefits, buoying hopes for the U.S. recovery.
Initial claims for U.S. unemployment benefits last week fell 37,000 to a five-month-low of 391,000, well below economists' expectations for 420,000 and below the key 400,000 level for the first time since early August.
Separately, the U.S. economy grew at annual rate of 1.3 percent, the government said in its final estimate for the second quarter, up from the previously estimated 1.0 percent.
That reflected consumer spending and export growth that was stronger than earlier estimated. [ID:nS1E78S0BT]
"Having a better than expected GDP revision, better than expected jobless claims ... that is going to have positive risk sentiment for the markets and ultimately that's what's going to matter for the Canadian dollar," said Mazen Issa, macro strategist at TD Securities.
The Canadian dollar climbed as high as C$1.0256 to the U.S. dollar, or 97.50 U.S. cents, shortly after the data was released, well above Wednesday's North American session close of C$1.0326, or 96.84 U.S. cents.
At 9:22 a.m. (1322 GMT), the Canadian currency was at C$1.0262 to the U.S. dollar, or $97.45 U.S. cents.
TD Securities said the day's range for the currency should hold between C$1.0150-C$1.04.
Worries about the European debt crisis remained a pressing factor in currency markets, and sentiment has whipsawed between fear and hope for the past week.
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. [ID:nB4E7KG01S]
The reaction in global equity and commodity markets was mixed, highlighting continued uncertainty over whether Greece can avoid a debt default.
"Essentially the market is just trying cling to risk-on but having trouble," said Camilla Sutton, chief currency strategist at Scotia Capital.
"As every vote for the EFSF 2 (European Financial Stability Facility) 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."
Bond prices were lower across the curve. The two-year Canadian government bond CA2YT=RR was down 1 Canadian cent to yield 0.933 percent, while the 10-year bond CA10YT=RR lost 33 Canadian cents to yield 2.231 percent. (Additional reporting by Claire Sibonney; editing by Peter Galloway)