October 13, 2010 / 12:19 PM / 10 years ago

CANADA FX DEBT-C$ rises to highest since late April on Fed

 * Canda dollar at C$1.0040 or 99.60 U.S. cents
 * Bonds little changed
 By John McCrank
 TORONTO, Oct 13 (Reuters) - The Canadian dollar rose on
Wednesday to its highest point against the greenback since late
April on signs the U.S. Federal Reserve would soon begin
pumping cheap cash into the flagging U.S. economy.
 Fed officials said in their Sept. 21 policy-setting
session, the minutes of which were released on Tuesday, that
they had a "sense that (more) accommodation may be appropriate
before long," including buying additional longer-term Treasury
securities. [ID:nN12191658]
 "The statement showed a degree of resoluteness in the FOMC
(Federal Open Market Committee) to basically step on the throat
of the deflation threat until it gives up," said David Watt,
senior currency strategist at RBC Capital Markets.
 Canada is heavily dependent on the U.S. economy as it
takes in about three-quarters of Canada's exports.
 "Our major trading partner, which went from looking like it
was going to be one of the leaders on the way out of the global
recession to all of a sudden having an increasingly fretful
outlook," said Watt. "Now all of a sudden, the Federal Reserve
is basically getting prepared to step on the gas pretty hard
and I think that is playing out to an extent in the Canadian
 At 8:00 a.m. (1200 GMT), the Canadian dollar CAD=D4 was
at C$1.0040 to the U.S. dollar, or 99.60 U.S. cents, up from
Tuesday's finish of C$1.0106 to the U.S. dollar, or 98.95 U.S.
cents. It was the currency's highest point against the
greenback since April 30.
 Government bond prices were little changed on Wednesday.
 The two-year bond CA2YT=RR was up 1 Canadian cent for a
yield of 1.370 percent, while the 10-year bond CA10YT=RR was
down 5 Canadian cents, yielding 2.733 percent.
 (Editing by Theodore d'Afflisio)

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