CANADA FX DEBT-Risk rally pushes C$ to record against euro

* Ends at C$1.0078 against U.S. currency
    * C$ hits high of C$1.0066 vs US$, or 99.34 U.S. cents
    * Currency hits record high of C$1.2314 against euro
    * Bond prices edge lower across the curve

    By Jennifer Kwan
    TORONTO, July 19 (Reuters) - Canada's dollar climbed to a
more than two-month high against the U.S. dollar on Thursday and
hit a record peak against the euro on strong commodity prices
and investor optimism about corporate earnings.
    U.S. stocks rose in part after rosier guidance from IBM
 and bullish earnings from eBay, which helped to
send oil prices sharply higher.  
    "Overall the commodities complex is higher on the day.
You've seen 'risk on' sentiment in the market. It seems people
are a touch more optimistic despite all the negativity in
Europe, the weak data in the U.S.," said Charles St-Arnaud,
economist and currency strategist at Nomura Securities in New
    Pressure remained on the U.S. dollar after Federal Reserve
Chairman Ben Bernanke kept alive talk of more monetary easing in
the second stage of his testimony to the U.S. Congress on
Wednesday, which also boosted commodities priced in U.S.
    "What we see today really is a combination of just
generalized U.S. dollar weakness against most of the G10
currencies and a moderately better tone for risk and all of that
adds up really to (U.S.) dollar/Canada being lower," said Adam
Cole, global head of FX strategy at RBC Capital Markets in
    Meanwhile, the Bank of Canada in the previous session kept
its rate-hike stance, despite other major advanced economies
moving in the opposite direction. 
    Higher interest rates typically help a country's currency
appreciate because they often attract international capital
    The Canadian dollar ended at C$1.0078 against the
U.S. dollar, or 99.23 U.S. cents, firmer than Wednesday's North
American finish at C$1.0107 versus its U.S. counterpart, or
98.94 U.S. cents.
    Earlier, the domestic currency touched C$1.0066, or 99.34
U.S. cents, its strongest level compared to the greenback since
May 16.
    After closing through the 200-day moving average on
Wednesday, Cole noted, the Canadian dollar could revisit parity
- a psychological resistance level - against its U.S.
counterpart in the near term, as long as risk appetite continues
to improve. Before that, it would have to test a retracement
level around C$1.0050.
    Nomura's St-Arnaud said the currency will likely trade in
the range of C$1.0050 to C$1.02 for the next several sessions.
    Against the euro, Canada's dollar hit a record of C$1.2314,
or 81.21 euro cents, its strongest level against the common
currency since it was created in January 1999.
    Optimism was tempered by data on U.S. manufacturing, housing
and labor markets, as well as a spike in Spain's borrowing costs
that intensified fears Madrid may eventually need a full-blown
sovereign bailout. 
    Canadian bond prices fell across the curve, with the
two-year government bond down 4 Canadian cents to
yield 0.981 percent, and the benchmark 10-year bond 
retreated 32 Canadian cents to yield at 1.654 percent.