March 8, 2010 / 9:33 PM / 10 years ago

CANADA FX DEBT-C$ ends higher for 7th straight day

 * Canadian dollar closes in on seven-week high
 * Bonds lower across the curve
 * Canada housing starts up 6.1 pct, more than expected
 By Ka Yan Ng
 TORONTO, March 8 (Reuters) - The Canadian dollar hit its
highest level against the U.S. dollar in nearly seven weeks on
Monday, driven by firmer oil prices and growing evidence that
the domestic economy is recovering.
 Closing higher for a seventh straight session, the Canadian
dollar was confined to a muted 44-basis-point range with a
brief run to session highs after data showed Canadian housing
starts rose a stronger than expected 6.1 percent in February.
 The commodity-linked currency was also lifted by a rise in
oil prices, an important Canadian export, to nearly $82 a
barrel. CLc1 [O/R]
 The Canadian dollar ended at C$1.0276 to the U.S. dollar,
or 97.31 U.S. cents, up from Friday's finish of C$1.0305 to the
U.S. dollar, or 97.04 U.S. cents.
 The currency is likely headed to test its October high of
C$1.0207 to the U.S. dollar as it has progressively inched
ahead in each of the last seven sessions.
 "Things are fairly positive for the Canadian dollar, and
whether or not we are going to break to a new high today,
tomorrow, next month, I think it's coming. All the factors
point that it is, it's just a question of timing," said Camilla
Sutton, currency strategist at Scotia Capital.
 The Canadian dollar added to last week's 2 U.S. cent gain,
which was fueled by a combination of strong economic data and
firming prices for key Canadian commodities. The rise was also
supported by a Bank of Canada statement last week that sounded
slightly more hawkish on interest rates. [ID:nN02149877]
 The Canadian dollar wasn't alone in its quiet trading
session as the greenback was flat against the yen, as was the
euro. [FRX/]    
 "Currencies are all sitting bunched in their ranges here,"
Sutton said.
 The Canadian unit rose as high as C$1.0250 against its U.S.
counterpart, or 97.56 U.S. cents, its highest point since Jan.
 But it pared gains as the details of the house starts
report showed that new home construction in the often-volatile
multi-dwelling sector far outpaced gains made by the closely
watched single-family home component.
 "The details weren't quite as spectacular as we would have
liked. So you get a little bit of a reaction of Canadian dollar
strength after the number, and then it's faded as people dig
into the numbers a bit," said David Watt, senior currency
strategist at RBC Capital Markets.
 Bonds held lower because of solidifying expectations that
the global recovery is on track and that domestic interest
rates are likely to rise in the second half of the year.
 The two-year Canadian government bond CA2YT=RR fell 5
Canadian cents to C$99.92 to yield 1.541 percent, while the
10-year bond CA10YT=RR dropped 28 Canadian cents to C$101.90
to yield 3.507 percent.
 Canadian bonds had a mixed performance against their U.S.
counterparts across the curve. The difference between 10-year
yields narrowed 0.8 basis points to 20.7 basis points.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)

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