March 25, 2010 / 12:11 PM / 10 years ago

CANADA FX DEBT-C$ rises on resource strength, Bank of Canada

 * C$ up at C$1.0195 to the USD, or 98.09 U.S. cents
 * BoC keeps rate stance, but seen as slightly more hawkish
 * Bond prices flat across curve
 By Jennifer Kwan
 TORONTO, March 25 (Reuters) - The Canadian dollar firmed up
on Thursday, lifted by rising commodity prices and a speech by
Bank of Canada Governor Mark Carney that was interpreted by
some in the market as slightly more hawkish on raising interest
 At 7:50 a.m. (1150 GMT), the Canadian dollar was at
C$1.0195 to the U.S. dollar, or 98.09 U.S. cents, up from
Wednesday's finish at C$1.0253 to the U.S. dollar, or 97.53
U.S. cents.
 "I think there's a bit of a delayed reaction to the Bank of
Canada Carney's comments yesterday, which most in the market
probably interpreted as being a little bit more hawkish and
that perhaps the expectation for the first Bank of Canada
interest rate hike may have moved back to the June date as
opposed to the July date," said David Bradley, director of
foreign exchange trading at Scotia Capital.
 Carney said on Wednesday the bank is monitoring firm
inflation numbers, and said that higher than expected consumer
prices in Canada have been the result of both transitory
factors and underlying economic strength. He also put extra
emphasis on the conditionality of the bank's commitment to
current ultra-low rates in language not used before.
 Bradley said another key factor supporting the currency's
rise was a weak U.S. dollar, which helped to push up the price
of oil and gold, key Canadian exports. [O/R] [GOL/]
 The Canadian dollar's move higher comes after the currency
fell to its lowest point in two weeks on Wednesday, pressured
by lower oil and equity prices as well as heightened investor
worries about sovereign debt in Greece, Portugal and others.
 Sovereign debt worries will remain in the spotlight on
Thursday, with investors continuing to show concern about
stability in the euro zone on the back of ongoing Greek
troubles and Wednesday's downgrade of Portuguese debt, as the
European Union kicks off a two day summit. [MKTS/GLOB]
 With no major market moving data on tap in Canada, bond
prices were flat across the curve, while the sell-off in U.S.
Treasuries eased in Europe on Thursday before the last of this
week's debt auctions. [US/]
 The two-year government bond CA2YT=RR was a hair higher,
up 1 Canadian cent at C$99.64 to yield 1.693 percent, while the
10-year bond CA10YT=RR edged 4 Canadian cents higher at
C$101.60 to yield 3.544 percent.
 (Reporting by Jennifer Kwan, Editing by Chizu Nomiyama)

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