May 26, 2009 / 3:38 PM / 11 years ago

CANADA FX DEBT-C$ turns higher, US data fuels risk appetite

 * C$ rallies as high as 89.18 U.S. cents.
 * More than 1 U.S. cent above overnight low
 * Bond prices turn mostly lower
 By Frank Pingue
 TORONTO, May 26 (Reuters) - The Canadian dollar bounced up
from early losses versus the greenback on Tuesday morning as
upbeat U.S. data whetted risk appetite.
 The turnaround in the Canadian currency followed figures
that showed U.S. consumer confidence soared in May to its
highest level in eight months. [ID:nN26484791]
 That report sent the Canadian dollar as high as C$1.1213 to
the U.S. dollar, or 89.18 U.S. cents, which was comfortably
above the C$1.1356 to the U.S. dollar, or 88.06 U.S. cents,
that it fell to overnight.
 "It looked again like a risk aversion day and now we are
right back into things are good and the world is safe," said
Steve Butler, director of foreign exchange trading at Scotia
Capital. "It's amazing how quickly the market just turns a
cheek and looks away when we get another bit of good news out
of the United States."
 The drag on the Canadian currency overnight was pegged to
lower oil prices and falling stocks overseas as tension over
North Korea's nuclear tests fueled more debate over the global
economic outlook.
 That sentiment carried into the North American session as
stocks opened lower, but the U.S. consumer confidence data was
enough to trigger a turnaround in sentiment.
 By 11:10 a.m. (1510 GMT), the Canadian unit was at C$1.1233
to the U.S. dollar, or 89.02 U.S. cents, up from C$1.1235 to
the U.S. dollar, or 89.01 U.S. cents, at Monday's close.
 The Canadian dollar is likely to be influenced by moves in
equities and the U.S. dollar due to lack of any Canadian
economic data.
 Canada's current account balance for the first quarter is
due on Friday, but first-quarter GDP figures next Monday will
likely be more important for market direction ahead of the Bank
of Canada's next interest rate announcement on June 4.
 Canadian bond prices relinquished early gains and were down
across much of the curve given the better-than-expected U.S.
data, which sapped demand for secure government debt.
 The U.S. report boosted North American equities, including
a gain of more than 1 percent on Toronto's main stock index.
 The benchmark two-year government was up 2 Canadian cents
at C$100.17 to yield 1.164 percent, while the 10-year bond
slipped 10 Canadian cents to C$103.80 to yield 3.302 percent.
 The 30-year bond was off 30 Canadian cents at C$116.90 to
yield 3.993.
 (Additional reporting by Ka Yan Ng; editing by Peter

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