October 12, 2011 / 2:43 PM / in 9 years

CANADA FX DEBT-C$ hits near 3-week high as markets embrace risk

 * C$ at C$1.0148 vs US$, or 98.54 U.S. cents
 * Bond prices track U.S. Treasuries lower
 By John McCrank
 TORONTO, Oct 12 (Reuters) - The Canadian dollar rose to its
highest level against the U.S. dollar in almost three weeks on
Wednesday morning as risk appetite grew on hopes that a crisis
in the euro zone will be averted.
 The euro hit a three-week high against a weaker greenback
and global stocks rallied as investors unwound safe-haven bids.
 "The combination of an improving economic outlook, a more
positive outlook for the euro, and optimism toward a year-end
equity rally is going to put people into buying into risk-on
trade, so that probably means people are going to be buying
Canada," said Michael O'Neill, vice president of FX Trading, at
RJOFX Canada.
 At 10:19 a.m. (1419 GMT), the Canadian dollar CAD=D3 was
at C$1.0148 against the U.S. dollar, or 98.54 U.S. cents, its
highest level since Sept. 22. That was up from Tuesday's North
American close of C$1.0279 to the U.S. dollar, or 97.29 U.S.
 O'Neill said he expects the currency to trade in a range of
C$0.9980 and C$1.0230 for rest of the week.
 Canada is a major exporter of commodities, which have been
under pressure in recent months as fears over the state of the
global economy put demand into question, but on Wednesday hopes
that a deal will soon be struck to expand the euro-zone's
rescue fund helped spark a rally.
 Gold prices XAU= were up 1 percent at over $1,680 and ounce
in response the the weaker U.S. dollar, while U.S. crude
futures rallied to over $86 a barrel on the back of euro zone
data that indicated the third-quarter economic slowdown there
may not have been as sharp as feared [O/R]
 On the Canadian data front, new home prices edged up 0.1
percent in August for the second straight month, showing more
moderate increases than in the second quarter, according to
Statistics Canada. [nN1E79B04U]
 Bond prices drifted lower across the board, tracking U.S.
Treasuries, as fears about Europe's debt crisis receded. [US/]
 The two-year Canadian government bond CA2YT=RR lost 6
Canadian cents to yield 1.016 percent, while the 10-year bond
CA10YT=RR dropped 53 Canadian cents to yield 2.360 percent.
 (Reporting by John McCrank; editing by Peter Galloway)

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