CANADA FX DEBT-C$ strongest since February as investors favor risk assets

Thu Apr 11, 2013 9:48am EDT
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* C$ at C$1.0103 vs US$, or 98.98 U.S. cents
    * C$ holds steady after positive U.S. jobless claims data
    * Chinese economic data shows signs of recovery

    By Solarina Ho
    TORONTO, April 11 (Reuters) - The Canadian dollar
strengthened about half a cent against the U.S. dollar on
Thursday and touched its strongest level in nearly two months,
benefiting from signs of a growing recovery in China and Japan's
aggressive monetary easing.
    Canada's dollar held its gains as data showed the number of
Americans filing new claims for unemployment benefits fell more
than expected last week. The figures eased fears of a marked
deterioration in U.S. labor market conditions after a surprise
stumble in job growth in March. 
    Since the Bank of Japan unveiled a radical stimulus program
a week ago, assets that benefit from stronger growth have
    In addition to the Canadian dollar, the MSCI's world equity
index has hit levels last seen in June 2008. Market sentiment
has also taken the S&P 500 index to a record high.
    The market's latest gains have been helped by evidence of an
economic recovery in China, notably signs of growing domestic
demand and easier credit, and also by indications from the
European Central Bank last week that it may cut rates.
    "It's basically a risk-asset move ... you're seeing equity
(markets) firmer as well. And there has been good correlation
between the Canadian dollar and the risk-on move," said Mark
Chandler, head of Canadian fixed income and currency strategy at
Royal Bank of Canada.
    Chandler noted Canada's fellow commodities-linked currency,
the Australian dollar, held on to gains against the U.S. dollar
despite a dismal employment report.
    At 8:57 a.m. (1357 GMT), the Canadian dollar was
trading at C$1.0103 versus the U.S. dollar, or 98.98 U.S. cents.
This was stronger than Wednesday's North American finish at
C$1.0144, or 98.58 U.S. cents.
    Earlier in the session, the currency touched C$1.0084, its
strongest performance against the greenback since Feb. 18.
    The Canadian dollar's performance was mixed against other
currencies. It was outperforming the Australian dollar
, but under performing the Japanese yen and
the New Zealand dollar, where it touched its weakest
level since mid-2005.
    The price of Canadian government debt was mixed, with the
two-year bond falling less than half a Canadian cent
to yield 0.995 percent and the benchmark 10-year bond
 rising 10 Canadian cents to yield 1.794 percent.