November 2, 2009 / 1:38 PM / 11 years ago

CANADA FX DEBT-C$ heads higher with oil, bonds slip

 * Canadian dollar rises to 92.65 U.S. cents
 * Bonds slip as stocks suggest higher open
 * Employment data, Fed in focus this week
 TORONTO, Nov 2 (Reuters) - The Canadian dollar was higher
against the U.S. currency on Monday on firmer commodity prices
in a quiet start, but volatility could return in a week that
features employment data and central bank policy meetings.
 Canadian bond prices were lower as U.S. stock index futures
pointed to a rebound after last week's big drop.
 Overnight, the Canadian currency weakened to C$1.0871 to
the U.S. dollar, or 91.99 U.S. cents, but recovered as euro
zone data confirmed an expansion in manufacturing activity and
renewed risk appetite.
 Oil, often a key driver of the Canadian dollar because the
country is a net exporter of the resource, rose towards $78 a
barrel, recovering from the previous session's steep drop.   
 The Canadian data calendar is very light this week until
Friday, leaving the currency to likely react to outside
influences for much of the week.
 "It could be quite a volatile week. We got a Fed decision,
two employment reports and a few other interesting things on
the agenda, and as a consequence, I think it will be a bit of a
rollercoaster ride," said Eric Lascelles, chief rates and
economics strategist at TD Securities. 
 October employment figures for Canada and the United States
are due at the end of the week, and investors will be looking
to see if the economic recovery has improved.
 Last week, Canada's growth picture became troubling after
data showing its gross domestic product shrank in August,
putting in doubt the Bank of Canada's forecast for
third-quarter growth.
 Meanwhile, this week also features meetings at other major
central banks, including the U.S. Federal Reserve and European
Central Bank, and a G20 finance ministers' meeting. [M/DIARY]
At issue in all cases is the future of the liquidity that has
been behind much of this year's financial market recovery.
 Some officials in Europe and countries such as Canada have
voiced concerns over the strength of their currencies. But G20
sources said on Monday that foreign exchange rates were not
expected to be a major topic. [ID:nL2324375]
 At 8:20 a.m., the Canadian dollar was at C$1.0793 to the
U.S. dollar, or 92.65 U.S. cents, up from C$1.0819 to the U.S.
dollar, or 92.43 U.S. cents, at Friday's close.
 The two-year bond CA2YT=RR fell 11 Canadian cents to
C$99.73 to yield 1.385 percent, while the 10-year bond
CA10YT=RR lost 7 Canadian cents to C$102.58 to yield 3.431
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)

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