CANADA FX DEBT-C$ gets a lift from stronger U.S. data

Thu Sep 29, 2011 10:00am EDT
 
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 * 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)