November 9, 2009 / 9:51 PM / 11 years ago

CANADA FX DEBT-C$ rallies to highest close since Oct. 23

 * Closes at C$1.0574 to US$, or 94.57 U.S. cents
 * Oil and gold prices help power rise
 * Bonds mostly flat across curve
 (Updates to session close)
 By Frank Pingue
 TORONTO, Nov 9 (Reuters) - The Canadian dollar charged to
its highest close in two weeks on Monday thanks to a Group of
20 promise to keep stimulus policies in place, a rise in
commodity prices and a generally weaker U.S. currency.
 The rally by the Canadian dollar started overnight and then
carried through the North American session where it eclipsed
technical levels that triggered a wave of buying.
 It rose as high as C$1.0542 to the U.S. dollar, or 94.86
U.S. cents, its highest level since Oct. 26, before backing off
slightly by the end of the session.
 "The fact that commodity prices and equities have done
quite well are obviously helpful for general risk appetite so
that all helps in terms of the general environment," said Shaun
Osborne, chief currency strategist TD Securities.
 "But lot of this move occurred overnight and it's just a
reflection of U.S. dollar weakness, so obviously there is more
support for risker assets."
 The G20 finance ministers and central bank governors, who
met over the weekend in Scotland, refrained from directly
addressing currencies in talks on rebalancing the global
economy. [ID:nLQ516726]
 Also, the International Monetary Fund said in a report that
while the U.S. dollar had depreciated recently, it was still on
the "strong" side, putting pressure on the U.S. currency.
 The Canadian dollar went on to close at C$1.0574 to the
U.S. dollar, or 94.57 U.S. cents, up from C$1.0753 to the U.S.
dollar, or 93.00 U.S. cents, at Friday's close. It was the
currency's highest close since Oct. 23.
 The Canadian unit's strength was in line with other global
currencies that benefited from renewed risk appetite, which
suggested U.S. interest rates will stay low for some time,
particularly after last week's soft U.S. jobs data. [FRX/]
 "It's really the comments that were attributed to the IMF
as well as the G20 that have had the U.S. dollar under
pressure," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.
 "The week is starting with increased risk appetite. Once
again, there's no guarantee that risk appetite maintains itself
because there's a lot of volatility in these markets right
 Bouncing off its lowest closing level in nearly a week on
Friday, the Canadian dollar also drew support from record gold
and rising oil prices [GOL/] [O/R] as well as hefty gains in
North American equities.
 Canadian bond prices ended mostly flat across the curve as
renewed risk appetite helped boost global stocks and lessened
the appeal of more secure government debt.
 Bond prices also had little reaction to Canadian data that
showed housing starts rose in October. [ID:nHND005510]
 "Generally, it's hard to push yields higher without central
banks talking tougher and they are not doing that," said Mark
Chandler, fixed income strategist RBC Capital Markets.
 "Just generally, when any central banker across the world
sort of had the opportunity, they said they are going to be
quite careful about how quickly they take back the stimulus."
 The two-year bond CA2YT=RR fell 1 Canadian cent to
C$99.69 to yield 1.406 percent, while the 10-year bond
CA10YT=RR rose 15 Canadian cents to C$102.00 to yield 3.501
 (Additional reporting by Ka Yan Ng; editing by Rob Wilson)

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