June 30, 2011 / 1:56 PM / 9 years ago

CANADA FX DEBT-C$ basks in data, oil, Greece relief rally

 * C$ firms to C$0.9659 to the U.S. dollar, or $1.0353
 * Bonds mostly higher across the curve
 By Solarina Ho
 TORONTO, June 30 (Reuters) - The Canadian dollar extended
its gains against the U.S. dollar on Thursday to its highest in
six weeks as the currency basked in a relief rally over
economic data, higher oil prices and easing uncertainty over
Greece's debt woes.
 Canadian gross domestic product data had its second-worst
monthly reading since September 2010, according to Statistics
Canada. Strength in the mining sector buoyed the economy,
however, offsetting a slump in auto manufacturing caused by
supply disruptions stemming from the Japanese tsunami. For more
see [ID:nN1E75T02E].
 "We have the Canadian dollar materially stronger over the
last few days. Almost everything is working in its favor," said
Camilla Sutton, chief currency strategist at Scotia Capital,
noting a general relief rally in markets.
 "We had much-stronger-than-expected inflation data and now
stronger-than-expected GDP data, so both will factor into
expectations for the Bank of Canada, pulling forward the
expectations of the market."
 At 9:04 a.m. (1304 GMT), the currency CAD=D4 stood at
C$0.9659 to the U.S. dollar, or $1.0353. This was up from
Wednesday's North American finish at C$0.9706 to the U.S.
dollar, or $1.0303. It hit a session high of C$0.9648, or
$1.0365, its highest level since May 20.
 Oil, a key Canadian export, also helped lift the
commodity-sensitive currency, with crude prices firming
following a report that showed U.S. jobless claims falling
slightly in the previous week. [O/R]
 On Wednesday, data showed that inflation in Canada rose to
its highest since May 2003, raising the prospect the central
bank could lift interest rates sooner than had been expected.
 Overseas, the euro climbed to a three-week high against the
U.S. dollar EUR=, swept higher by month-end demand which
helped it extend a rally after Greece moved a step closer to
securing international aid. [FRX/]
 "Markets are feeling quite relieved about (Greece). Having
that uncertainty out of the way is an important milestone for
the euro and currency markets," said Sutton, who expected the
currency to trade between C$0.9610 and C$0.9710 on Thursday.
 Manufacturing data out of China overnight will likely be
one of the next drivers for the Canadian currency.
 "Any upside surprise on that will be positive for the
Canadian dollar," said Sutton.
 Canadian bond prices were mostly higher across the curve.
 The two-year bond CA2YT=RR was up 1.5 Canadian cents to
yield 1.555 percent, while the 10-year bond CA10YT=RR rose 27
Canadian cents to yield 3.055 percent.
 (Editing by James Dalgleish)

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