November 9, 2010 / 1:17 PM / 10 years ago

UPDATE 1-C$ flees parity on broadbased greenback recovery

   * C$ hits strongest level since Oct. 14, but pares gains
 * Flees parity to trade at 99.65 U.S. cents
 * Bond prices fall across curve
 (Recasts, updates to mid-afternoon)
 By Claire Sibonney
 TORONTO, Nov 9 (Reuters) - The Canadian dollar eased away
from parity against its U.S. counterpart on Tuesday, pressured
by a bounce in the greenback and a broad flight from riskier
 Earlier, Canada's currency edged above one-for-one footing
with the U.S. dollar to its strongest levels since Oct. 14, as
commodity prices rallied and a lift in the euro helped whet
appetite for other risk-related plays.
 But the euro faltered as investors worried about Irish and
Portuguese government debt and hedged sizable bets against the
U.S. dollar.
 "It's been a broad market move, euro has kind of led it,
sterling's followed, gold has absolutely collapsed," said Sacha
Tihanyi, currency strategist at Scotia Capital."
 "It's really the dollar moving very much higher ...
equities are all moving in the same direction as well.  It's a
risk move by the looks of it considering everything moving in
tandem like this."
 Growing inflation fears among some investors and pressure
on the greenback after the U.S. central bank's actions to
bolster the U.S. economic recovery had boosted the prices of
crude oil and gold -- key Canadian commodities. Gold hit a
record high on Tuesday before retreating. [GOL/]
 At 2:28 p.m. (1928 GMT), the Canadian dollar CAD=D4 was
C$1.0035 to the U.S. dollar, or 99.65 U.S. cents, practically
flat compared to C$1.0037 to the U.S. dollar, or 99.63 U.S.
cents, on Monday, when it closed lower for the first time in
eight sessions.
 In early trade, the Canadian dollar firmed as high as 99.80
Canadian cents to the U.S. dollar, or $1.002.
 Tihanyi said that precise level, last hit on Oct. 14,
continues to provide short-term resistance for the Canadian
dollar. On the support side, he was looking at recent weakness
around C$1.0080, or 99.21 U.S. cents.
 At this point, Tihanyi said parity is still in reach.
 "Parity loses its meaning psychologically the more you
trade around it so I think it certainly is still achievable."
 Canadian government bond prices were lower across the
curve, weighed down by declines in U.S. Treasuries.
 The two-year bond CA2YT=RR lost 11 Canadian cents to
yield 1.590 percent, while the 10-year bond CA10YT=RR shed 60
Canadian cents to yield 2.960 percent.
 (Editing by Jeffrey Hodgson)

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