Thursday July 30, 2009 - 21:08:26 GMT
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Reuters - www.reuters.com
Forex Market News - CANADA FX DEBT-C$ gains as data helps lower risk threshold
Thu Jul 30, 2009 4:51pm EDT
* C$ rises to close at C$1.0842 to the U.S. dollar
* Gain fueled by economic data, commodity price rise
* Bond prices flat to lower
(Adds details, quote)
By Jennifer Kwan
TORONTO, July 30 (Reuters) - Canada's dollar strengthened
against the U.S. currency on Thursday as upbeat economic data
and corporate earnings as well as higher commodities prices
helped whet investor appetite for riskier currencies.
During the day, the Canadian dollar rose as high as
C$1.0803 to the U.S. dollar, or 92.57 U.S. cents, after two
straight North American sessions of decline.
Market confidence in the currency was also aided by a rally
in U.S. stocks on solid corporate profit reports and a drop in
the number of Americans on jobless benefits.
Data on Thursday also showed euro zone economic sentiment
rose in July, the fourth improvement from a trough in March,
which helped signal that the economy there is bottoming out.
"The story is a return to some risk appetite," said Michael
Gregory, senior economist at BMO Capital Markets.
"We're seeing equity markets up strongly across the board
today in Asia, Europe and in North America, and that's helping
the Canadian dollar."
The Canadian unit finished at C$1.0842 to the U.S. dollar,
or 92.23 U.S. cents, up from C$1.0907 to the U.S. dollar, or
91.68 U.S. cents, at Wednesday's close.
Helping to boost risk appetite overnight were comments from
China's central bank, which pledged to keep monetary policy
loose to support economic recovery. [ID:nPEK357846]
Talk of an economic recovery boosted prices for oil, gold
and other commodities that Canada exports.
"That's part of the broader risk appetite theme, especially
on the oil side," said Matthew Strauss, senior currency
strategist at RBC Capital Markets.
Oil prices CLc1 jumped more than 5 percent to settle near
$67 a barrel on rosy economic data. [ID:nSP411146]
BOND PRICES FLAT TO LOWER
Canadian bond prices were flat to lower as money flowed
into equities, with Toronto's main stock index up 2 percent,
while U.S. stocks finished firmly in the black.
"It's reflecting the moving out of less risky bonds into
the equity markets," Gregory said.
The two-year Canada bond was down 2 Canadian cents at
C$99.06 to yield 1.462 percent, while the 10-year bond slipped
27 Canadian cents to C$101.53 to yield 3.563 percent.
The 30-year bond was down 5 Canadian cents to C$115.70 to
yield 4.053 percent. In the United States, the 30-year Treasury
yielded 4.4204 percent.
Canadian bonds mostly underperformed U.S. Treasuries across
the curve. The Canadian 30-year bond was 37 basis points below
the U.S. 30-year yield, compared with about 46 basis points
below on Wednesday.
(Reporting by Jennifer Kwan; editing by Peter Galloway)
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