* Canadian dollar ends at 96.74 U.S. cents
* Oil, equity rally helps C$ move higher
* Bond prices lower across curve on risk appetite
(Updates to close, adds details)
By Jennifer Kwan
TORONTO, July 13 (Reuters) - Canada's dollar ended higher
against the greenback on Tuesday, boosted by a return of risk
appetite on optimism over corporate earnings and a successful
Greek auction that eased worries about euro-zone debt.
The Canadian dollar touched a high of C$1.0276 to the U.S.
dollar, or 97.31 U.S. cents, its highest level since June 23,
as North American equity markets finished the session firmly in
Investors were in the mood to buy riskier assets after
Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz), the largest U.S. aluminum producer and seen
as a bellwether for the U.S. economy, reported stronger than
expected results and raised its estimate for global aluminum
That was followed by Greece's successful return to capital
markets with a T-bill sale, passing its first borrowing test
since securing a 110 billion euro emergency funding deal in
May. [MKTS/GLOB] [ID:nLDE66C0DH]
"It's pretty much the return of risk appetite that took
everything risky higher. We saw oil prices increasing,
commodity prices increasing, equities higher," said Matthew
Strauss, senior currency strategist at RBC Capital Markets.
The Canadian dollar CAD=D4 finished at C$1.0337 to the
U.S. dollar, or 96.74 U.S. cents, up from Monday's finish at
C$1.0375 to the U.S. dollar, or 96.39 U.S. cents.
Increased risk appetite saw global equities advance on an
upbeat earnings outlook, while oil prices rose above $77 a
barrel on optimism for the economic recovery and stronger
demand. [MKTS/GLOB] [O/R]
As well, domestic data showed that strong demand from
Canadian businesses and consumers triggered a surge in imports
in May that outpaced exports, leading to the third consecutive
monthly trade deficit. [ID:nN13232203]
"The expectation was that it would be flat and the prior
number was revised lower, so wider, and that has negative
implications for GDP," said Camilla Sutton, currency strategist
at Scotia Capital.
"But when you look at the details the imports were very
strong, which is also good sign there's ongoing demand."
RBC's Strauss said key technical ranges for the currency
included C$1.0219 to the U.S. dollar and C$1.0380-C$1.0415.
He added the currency would "very much a prisoner of global
sentiment" until next week's Bank of Canada interest rate
decision on July 20.
Yields on overnight index swaps, which trade based on
expectations for the Bank of Canada's key policy rate, are
pricing in an 89 percent likelihood of a July 20 rate hike.
RISK RALLY PRESSURES BONDS
Canadian bond prices fell across the curve as investors
flocked to higher-yielding assets. [US/]
"It's part of the risk appetite returning and the market
more comfortable with the global recovery story," said
The two-year bond CA2YT=RR fell 5 Canadian cents to yield
1.711 percent, while the 10-year bond CA10YT=RR sank 50
Canadian cents to yield 3.273 percent.
Canadian bonds notched a mixed performance against U.S.
issues. The Canadian 2-year bond CA2YT=RR was 105 basis
points above its U.S. counterpart, compared with about 104
basis points in the previous session.
(Reporting by Jennifer Kwan; editing by Rob Wilson)