April 9, 2009 / 8:31 PM / 11 years ago

CANADA FX DEBT-C$ rises for third day as equities surge

 * C$ finishes at C$1.2252, or 81.62 U.S. cents
 * Currency shrugs off Canada 61,300 job loss in March
 * Gets support from Canada February trade surplus
 * Bonds lower as equities rally  (Updates to close, adds details, quotes)
 By Jennifer Kwan
 TORONTO, April 9 (Reuters) - The Canadian dollar rose against the U.S. currency on Thursday as global equity markets surged on optimism about the U.S. banking sector, whetting appetite for risk in the foreign exchange market.
 An upbeat earnings estimate from Wells Fargo (WFC.N), the fourth-largest bank in the United States, helped to light the fire under equity markets. [ID:nN09260398]
 “The overall trend in the market was pointing toward further strength, with the risk appetite continuing and even increasing further today on the back of good guidance from Wells Fargo,” said Matthew Strauss, senior currency strategist at RBC Capital Markets.
 “We saw commodity-based currencies and cyclical currencies doing very well.”
 The Canadian dollar finished at C$1.2252 to the U.S. dollar, or 81.62 U.S. cents, up from C$1.2373 to the U.S. dollar, or 80.82 U.S. cents, at Wednesday’s close.
 The market generally shrugged off big Canadian job losses, which came in worse than expected, but not as bad as the most dire forecasts.
 Data on Thursday showed Canada shed 61,300 jobs in March, while the unemployment rate shot up to a seven-year high. [ID:nN09253705] That was worse than the 55,000 job losses forecast by analysts surveyed by Reuters, but the figure came in under the high-side forecast of 90,000 job losses.
 Government data also showed Canada posted a small trade surplus in February after two months of deficit. [ID:nN09258996]
 “The trade number was a welcome surprise. It lent some support,” said Strauss.
 Also adding to market confidence were reports that the U.S. trade deficit narrowed 28.3 percent in February, while weekly jobless claims fell. [ID:nN09264963].
 As well, the price of oil CLc1, a key Canadian export, rose above $52 a barrel, fueled by the rally on Wall Street.
 Markets in Canada will be closed on Friday for the Easter holidays.
 Canadian bond prices were lower across the curve as rising stock markets and hope for economic stabilization dented the appeal of safe-haven government bonds. [ID:nN09511115]
 “As people sense some stabilization in the economy they probably anticipate some action down the road,” said Millan Mulraine, economics strategist at TD Securities.
 “That will be reflected in the bond market, as in pressuring bond prices and driving yields higher.”
 The two-year Canada bond was down 7 Canadian cents at C$100.27 to yield 1.121 percent, while the 10-year bond retreated 45 Canadian cents to C$107.02 to yield 2.942 percent.
 The 30-year bond was down 50 Canadian cents to C$123.65 to yield 3.648 percent. In the United States, the 30-year Treasury yielded 3.7490 percent.
  Canadian bonds mostly outperformed their U.S. counterparts. The 30-year bond yield was 10.1 basis points below its U.S. counterpart, compared with 4.90 basis points on Wednesday.  (Reporting by Jennifer Kwan; editing by Peter Galloway)                               

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