CANADA FX DEBT-C$ rallies to 3-month peak on BoC, global markets

* Ends at C$0.9920 to US$, or $1.0081
    * C$ hits high of C$0.9913 vs US$, or $1.0088
    * Supported by expectation BoC will raise rates
    * Weak China data keeps stimulus hopes alive
    * Currency hits record against euro
    * Bond prices mostly higher

    By Jennifer Kwan
    TORONTO, Aug 9 (Reuters) - Canada's dollar climbed to a
fresh three-month peak against its U.S. counterpart on Thursday,
buoyed in part by comments from the Bank of Canada, and as
broader markets rose on hopes some central banks will act to
stimulate their economies.
    The Canadian currency touched C$0.9913 against the
U.S. dollar, or $1.0088, its strongest since May 4 after Bank of
Canada Governor Mark Carney on Wednesday argued the case for
raising rates in an interview with the BBC in London, even
though he said a global slowdown was having an impact on
Canada's economy. 
    Against the euro, the Canadian dollar rose to
C$1.2165, or 82.20 euro cents, and hit multi-month highs against
sterling and the yen. 
    "It's mainly reminding the market that the Bank of Canada is
not ready to cut and that the next move they have in mind is a
hike," said Charles St-Arnaud, economist and currency strategist
at Nomura Securities in New York.
    But St-Arnaud said that was just a part of the bigger
picture. The currency has gotten a boost in recent sessions as
foreigners favor Canadian assets as a safe haven given the
turbulent global economy.
    The Canadian dollar ended at C$0.9920 versus the
U.S. currency, or $1.0081, higher than Wednesday's close at
C$0.9946 against the greenback, or $1.0054.
    Also supporting the currency's move higher was steadiness in
global equity markets. U.S. stocks stayed near four-year highs
and European shares nudged closer to their peak of the year on
    A key catalyst for the move higher in global stocks appeared
to be data from China that showed annual consumer inflation hit
a 30-month low last month and industrial output grew at it
slowest pace in some three years, keeping alive hopes that
policymakers would take more action to keep China's growth on
    Stock markets around the world rose on Friday after U.S.
jobs data eased concerns about global growth but supported hopes
of further policy easing by the Federal Reserve. As well, last
week's signal by European Central Bank President Mario Draghi
that it may ease borrowing costs for Spain and Italy provided
further optimism.
    On Thursday, ECB governing council member Christian Noyer
said the central bank is determined to bring down those
borrowing costs and should be ready to intervene decisively in
bond markets very soon.
    "The general theme seems to be in place for the market
expecting central bank action out of the ECB and the Fed," said
John Curran, senior vice president at CanadianForex.
    The next key market moving event was domestic jobs data due
out on Friday.
    For the third month running, Canada's job market is expected
to have registered only small gains in July, matching lukewarm
economic growth, if indeed employment grew at all. The median
forecast in a Reuters survey of economists is for 9,000 new
jobs, and the unemployment rate staying at 7.2 percent.
    Activity in overseas markets overshadowed domestic data.   
Canada's trade deficit unexpectedly soared to a 21-month high in
June on record imports of machinery and equipment, suggesting
the domestic economy is still resilient and companies are using
the stronger Canadian dollar to boost their competitiveness.
    Elsewhere, Canada's hot housing market showed signs of
cooling on Thursday as July housing starts slowed more sharply
than expected, but housing prices were still climbing in June
and analysts said a real slowdown may not come until late in
    Jeremy Stretch, head of foreign exchange strategy for CIBC
in London, said the currency would likely stay within a narrow
range, between C$0.9920 to C$0.9970.
    Canadian bond prices were flat to mostly higher. The
two-year bond was unchanged to yield 1.162 percent,
and the benchmark 10-year bond was up 12 Canadian
cents to yield 1.810 percent.