Canadian dollar pushes higher on BHP bid for Potash

Tue Aug 17, 2010 9:19am EDT
 
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TORONTO (Reuters) - The Canadian dollar got a boost against the U.S. currency on Tuesday as market focus turned to a rejected bid by Canadian fertilizer group Potash Corp of Saskatchewan by BHP Billiton.

Among a slew of overnight and early North American developments, market focus was on Potash Corp and its board's rejection of BHP Billiton's unsolicited $38.6 billion offer.

The world's largest fertilizer company termed the proposal as "grossly inadequate," and adopted a shareholder rights plan.

"The market seems to be focused more on BHP's bid, (though) rejected, for Potash. It's a significant upside potential for the Canadian dollar (on) the inference that a deal this size could be in play for one of Canada's biggest companies," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

In this case, the Canadian dollar is poised to firm as the foreign company would need the local currency to finance an acquisition.

At 8 a.m., the Canadian dollar was at C$1.0377 to the U.S. dollar, or 96.37 U.S. cents, not far off the session high at C$1.0365 to the U.S. dollar, or 96.48 U.S. cents.

It was up from C$1.0446 to the U.S. dollar, or 95.73 U.S. cents, at Monday's close.

Canadian government bond prices were lower ahead of the day's data, while the market was also on guard for the U.S. Federal Reserve to kick off the first of a series of bond-buying sprees.

Canada's two-year bond was off 4 Canadian cents to yield 1.369 percent, while the 10-year bond fell 25 Canadian cents to yield 2.955 percent.   Continued...