February 11, 2011 / 6:48 PM / 9 years ago

CANADA FX DEBT-Oil price pulls C$ off post-Mubarak high

   * C$ at C$0.9890, or $1.0111
 * Strong Canadian trade data gave early boost
 * C$ hit session high of C$0.9881 on Mubarak news
 * Two- and 10-year bond prices lower
 (Updates with details and comments)
 By Solarina Ho
 TORONTO, Feb 11 (Reuters) - The Canadian dollar rose
against the greenback on Friday, but was off highs hit
immediately after Egyptian President Hosni Mubarak resigned, as
falling oil prices tempered the currency's gains.
 The Canadian dollar and other risk-sensitive assets rose on
news of Mubarak's departure on hopes the Egyptian crisis has to
some degree been defused.
 "That's probably created a bit more of a pro-risk
sentiment," Shaun Osborne, chief currency strategist at TD
Securities, said after Mubarak bowed to pressure from a popular
uprising and left office. [ID:nLDE7192NZ]
 The Canadian dollar had strengthened earlier on data that
showed Canada's trade balance returned to surplus in December
after nine months of deficits, fueling hopes of an export
recovery. Oil and energy product shipments to the United States
led the export surge.  [ID:nN11157853]
 At 1:24 p.m. (1824 GMT), the Canadian currency CAD=D4 was
at C$0.9890 to the U.S. dollar, or $1.0111. The currency closed
the North American session on Thursday at C$0.9958 to the U.S.
dollar, or $1.0042.
 It climbed as high as C$0.9881, or $1.0120, just after
Mubarak's resignation was announced. But a subsequent drop in
the price of oil, a major Canadian export, then pulled it
 Crude prices fell as concern eased that the Egyptian unrest
could spread to oil producing countries in the Middle East and
that supply could be disrupted. [O/R]
 Osborne said the Canadian currency is trading in a tight
band that he does not expect it to break out of soon. He sees
resistance in the low C$0.9800 range and support just above
U.S. dollar parity.
 "The Canadian dollar is looking quite highly valued against
the U.S. dollar as it is. What would drive us significantly
beyond that point? I think you'd have to see a sharper widening
out in short-term interest-rate spreads in the Canadian
dollar's favor."
 Canadian bond prices were mostly lower after the strong
trade data. The two-year Canadian government bond CA2YT=RR
fell 7.5 Canadian cents to yield 1.914 percent, while the
10-year bond CA10YT=RR fell 12 Canadian cents to yield 3.483
 (Editing by Peter Galloway and Jeffrey Hodgson)

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