* C$ closes at 96.97 U.S. cents
* New Zealand rate hike, strong Aussie data hike help mood
* Bank of Canada's Carney: too soon to gauge Europe impact
* Bond prices drop as safe-haven bid cools
(Updates to close, adds details, quotes)
By Claire Sibonney
TORONTO, June 10 (Reuters) - Canada's dollar rose to its
strongest point against the U.S. dollar in more than three
weeks on Thursday after a bullish report on Chinese exports
increased hopes for global economic recovery and pushed up
Chinese exports surged 48.5 percent in May over a year
earlier, well above forecasts for a 32 percent gain, confirming
a Reuters report from Wednesday. [ID:nTOE65901X]
As global equities and commodities rallied on the news, the
currency CAD=D4 touched a high of C$1.0287 against the
greenback, or 97.21 U.S. cents, a jump of almost a cent and a
half from Wednesday's close and its strongest level since May
Against the euro, the Canadian dollar firmed to trade
around C$1.2450, or 80.32 euro cents, levels not seen since
"It was very much a risk-on type atmosphere from when we
walked in this morning," said David Bradley, director of
foreign exchange trading at Scotia Capital.
U.S. crude oil prices rose more than a dollar to over $75 a
barrel, while copper firmed to its highest in nearly a week,
supporting Canada's commodity-linked currency. [O/R] [GOL]
Bradley said a couple big players, such as central banks or
institutional investors diversifying their holdings, were
behind the Canadian dollar's move versus the euro.
"There's been consistent interest over the last month or
two ... and today was no exception."
The Canadian dollar also outperformed against the yen and
Swiss franc, traditional safe havens along with the U.S.
The currency closed the North American session at C$1.0312
to the U.S. dollar, or 96.97 U.S. cents, up from Wednesday's
North American finish of C$1.0443 to the U.S. dollar, or 95.76
Bradley said he was eyeing a technical level of C$1.0250
for a move closer toward parity.
"Breaking that level we could probably have a move back
down towards the C$1.0110 level," he said.
"If that happens we'd probably get a break lower in
euro/Canada to that all-time low too so that would probably
help the move accelerate."
The Canadian dollar was trading one-for-one with the
greenback through much of April as the global economy appeared
to be on the mend and Canada's economic fundamentals looked the
strongest in the G7.
But the sovereign debt situation in Europe put a heavy dose
of fear back into the markets, pushing up the U.S. dollar and
sending commodity prices lower.
As a result, the Canadian dollar hit a 2010 low of
C$1.0854, or 92.13 U.S. cents, on May 25, but has been slowly
gaining ground as the concerns about Europe eased and the
global recovery was seen as gaining momentum.
Bank of Canada Governor Mark Carney told reporters after a
speech in Montreal on Thursday that it was too early to gauge
how recent euro zone concerns might affect Canada's economy.
But the comments had little currency market impact.
"His comments are really not off target with respect to
what we've heard not only from him, his department, as well as
(U.S. Federal Reserve Chairman Ben) Bernanke," said Jack Spitz,
managing director of foreign exchange at National Bank
Elsewhere on Thursday, a robust employment report out of
Australia helped cheer market sentiment, as did a move by New
Zealand's central bank to lift interest rates from a record
low, its first hike since the global economic crisis.
Spitz added that better than expected data in Sweden, a
solid bid on a Spanish three-year bond auction, and comments
from China on betting on a rise in the euro, added to the
bullish market environment.
That helped push the Dow Jones industrial average .DJI up
more than 2 percent and the Toronto Stock Exchange's S&P/TSX
composite index .GSPTSE up more than 1 percent.
CANADIAN BOND PRICES FALL
Canadian bond prices were lower across the curve as the
rise in stock markets cooled investors' demand for the safety
of government debt.
The two-year government bond CA2YT=RR fell 18.5 Canadian
cents to yield 1.817 percent, while the 10-year bond
CA10YT=RR fell 64 Canadian cents to yield 3.431 percent.
On the domestic data front, Canada recorded a smaller than
expected trade surplus in April due to the strong Canadian
Other numbers showed continued strength in Canada's housing
sector, with new home prices up for a 10th consecutive month,
but the pace is expected to cool in the second half of the year
as new taxes take a toll.
Neither report is usually considered a market mover.
With risk appetite in play, Canadian bonds continued to
outperform U.S. Treasuries at the long end of the curve, with
the 10-year yield 10.6 basis points above its U.S. counterpart,
down from 17.7 basis points on Wednesday.
In new issues, the province of Ontario sold C$600 million
of 4.65 percent bonds due June 2, 2041. [CAN-TNC]
(With additional reporting by John McCrank; Editing by Jeffrey