May 18, 2011 / 9:34 PM / 9 years ago

CANADA FX DEBT-C$ rises with commodities, stays rangebound

   * C$ rises to C$0.9706 per US$, or $1.0303
 * Stays within range of C$0.9700-C$0.9760
 * Bond prices fall
 By John McCrank
 TORONTO, May 18 (Reuters) - The Canadian dollar edged
higher against the U.S. dollar on Wednesday, supported by
rising oil prices and a more positive tone in equity markets.
 The price of U.S. crude oil rose 3 percent to settle above
$100 a barrel, helped by a weekly U.S. government report that
showed refinery usage was up, denting inventories and
suggesting stronger demand. [O/R]
 Commodities strengthened in general as investors rushed in
at bargain prices after big declines in recent weeks. The
Reuters-Jefferies CRB index .CRB, a global benchmark that
covers a basket of 19 commodities, rose 2.3 percent for its
biggest one-day gain since March 17.
 The resource-heavy Toronto Stock Exchange gained 1.24
percent on the day. [ID:nTZOIGE71Q]
 Canada is a major exporter of oil and other commodities and
its currency is often influenced by moves in their prices.
 The Canadian dollar "hasn't benefited as much as one would
have expected from the push in oil to $100 and stronger
equities," said Camilla Sutton, chief currency strategist at
Scotia Capital in Toronto.
 She said it was a quiet day overall in the markets with
tight ranges for most currencies.
 The Canadian dollar CAD=D4 ended the North American
session at C$0.9706 to the U.S. dollar, or $1.0303, up from
Tuesday's finish at C$0.9726 to the U.S. dollar, or $1.0282.
 The currency stayed within a range of C$0.9700 to
 The Canadian dollar has been on a mostly downward trend
versus the greenback since it hit a 3-1/2 year high on April
 Concerns about the state of the global economy as a result
of U.S. fiscal problems and European sovereign debt worries
have made investors question the demand outlook for
commodities. The Canadian dollar, as well as other
commodity-linked currencies like the Australian dollar, have
softened as a result.
 While Canada's fiscal situation is seen as sound, Bank of
Canada Governor Mark Carney reiterated in a speech this week
the litany of risks to the domestic economy from outside
 That prompted Toronto-Dominion Bank to push out its
forecast for the next central bank rate increase to September
from July.
 "There is no urgency for the Bank of Canada to hike right
now," Mazen Issa, macro strategist at TD Securities.
 "The bank is more willing to take on inflation risk than to
risk having any sort of significant downside from the headwinds
that are facing the market."
 Canadian bond prices fell as investors bet on equities
rather than the relatively safer, but less lucrative,
government debt.
 Canada's two-year bond CA2YT=RR fell 7 Canadian cents to
yield 1.679 percent, while the 10-year bond CA10YT=RR was off
55 Canadian cents to yield 3.229 percent.
 On the domestic data front, Canada's composite leading
indicator climbed 0.8 percent in April from March. Other data
showed wholesale trade inched up 0.1 percent in March from
February as declines in several sectors offset partial gains in
the auto sector. [ID:nSCLIGE7CB] [ID:nSCLIGE7CC]
 On Friday, Statistics Canada releases inflation data for
April and retail sales for March.
 The figures are among the few last before the Bank of
Canada's next interest rate decision on May 31, when it is
expected to stand pat at 1 percent.
 (Reporting by John McCrank; editing by Rob Wilson)

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