February 24, 2010 / 4:59 PM / in 10 years

CANADA FX DEBT-C$ boosted by reassuring Bernanke remarks

 * Bernanke signals U.S. rates to remain low
 * U.S. home sales drop to record low in January
 * C$ up at 94.99 U.S. cents
 * Bonds mixed across the curve
 (Recasts after Bernanke testimony, U.S. home sales data)
 By Claire Sibonney
 TORONTO, Feb 24 (Reuters) - The Canadian dollar perked up
against its U.S. counterpart on Wednesday as investor appetite
for riskier assets was whetted by remarks from U.S. Federal
Reserve Chairman Ben Bernanke, who reaffirmed his vow to keep
interest rates low.
 Bernanke told Congress that a weak job market and low
inflation would likely allow the U.S. central bank to keep
interest rates at very low levels for "an extended period."
 "There's nothing in the speech that would suggest he's
itching to tighten policy," said Sal Guatieri, a senior
economist at BMO Capital Markets.
 The remarks offset dismal data that showed sales of newly
built U.S. single-family homes hit their lowest level since
records started in January 1963, hinting at possible troubles
for the fragile U.S. housing market's recovery.
 "The tone of Bernanke's commentary is on the dovish side
but the new home sales numbers are a real shock, suggesting
just how fragile the U.S. housing market is," said Guatieri,
 He pointed out that the data was particularly gloomy given
the extension of a popular tax credit for first-time home
buyers, which was also expanded for repeat buyers.
 At 11:00 a.m. (1600 GMT) the Canadian dollar was at
C$1.0527 to the U.S. dollar, or 94.99 U.S. cents, up from
Tuesday's close at C$1.0566 to the U.S. dollar, or 94.64 U.S.
 Canadian bond prices were mixed across the curve after
Bernanke's testimony sent equity markets higher.
 The two-year Canadian government bond CA2YT=RR was flat
at C$100.335 to yield 1.331 percent, while the 10-year bond
CA10YT=RR added 2 Canadian cents to C$102.520 to yield 3.430
 (Reporting by Claire Sibonney; editing by Rob Wilson)

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