May 27, 2010 / 1:40 PM / 10 years ago

CANADA FX DEBT-C$ jumps after China comments on euro zone

 * C$ touches 95.12 U.S. cents
 * Oil tops $73 on equity rebound
 * Market heavily favors June 1 rate hike
 By Claire Sibonney
 TORONTO, May 27 (Reuters) - The Canadian dollar shot higher
against the U.S. currency on Thursday after news that China
denied a report it was looking to cut its euro zone sovereign
debt holdings recovered appetite for riskier assets.
 The Canadian dollar jumped more than 1 1/2 cents to hit a
session high of C$1.0515, or 95.12 U.S. cents, as oil topped
$73 a barrel and European stocks pushed higher. [O/R]
 North American equities were also set to surge at the open.
[.N] [.TO]
 "Canadian dollar up 1.5 percent, driven higher by
increasing risk appetite after China reaffirmed that Europe is
a key investment for them and lots of focus on the OECD's
bullish growth forecast," said Camilla Sutton, currency
strategist at Scotia Capital.
 "Really just risk aversion coming much lower so G7 currency
volatility coming off ... all that has given commodity
currencies a nice big boost and CAD is benefiting on the back
of that."
  The euro, which in recent weeks has become a proxy for
risk appetite, also rose on the news from Beijing. [FRX/]
 At 9:03 a.m. (1303 GMT), the Canadian dollar CAD=D4 was
at C$1.0560, or 94.70 U.S. cents, up from Wednesday's close at
C$1.0686 to the U.S. dollar, or 93.58 U.S. cents.
 Sutton said further support for the currency will be met at
the 200-moving day average of C$1.0479.
 Also lifting sentiment for the Canadian currency was ramped
up expectations that the Bank of Canada will hike rates on June
1, with the market pricing in a near 70 percent chance on
Thursday morning. [BOCWATCH]
 (Reporting by Claire Sibonney; Editing by Chizu Nomiyama)

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