CANADA FX DEBT-C$ climbs on domestic data, easing Irish fears

Published 11/18/2010, 04:38 PM
Updated 11/18/2010, 04:44 PM
GC
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* C$ ends at 97.90 U.S. cents

* Risk appetite, domestic data supports C$

* Bond prices slightly lower (Updates to close, adds quote)

By Jennifer Kwan

TORONTO, Nov 18 (Reuters) - Canada's dollar ended higher against its U.S. counterpart on Thursday as optimism that Ireland may soon resolve its debt woes nudged investors toward higher-yielding currencies and away from the greenback.

Global stocks soared on Thursday, while the euro firmed as uncertainty about the Irish debt crisis ebbed. [FRX/] [MKTS/GLOB]

Ireland's central bank chief said on Thursday he expected Dublin to receive tens of billions of euros in loans from European partners and the IMF to shore up its shattered banks. [ID:nLDE6AH0HV] [FRX/]

"It was obviously the news, or the expectations, that Ireland would accept EU and IMF support. At least a temporary resolution of that situation was what helped risky assets," said Mark Chandler, head of Canadian fixed income and currency strategy.

Chandler said the Canadian currency also got a bounce from domestic data that showed the composite leading indicator rose 0.2 percent in October after dropping in September, while wholesale trade unexpectedly rose 0.4 percent in September. [ID:nSCLIME67B] [ID:nN18271262]

"We did have better economic statistics to kick off the day, but mostly it's just a reflection of the risk-on move that had the U.S. dollar weaker against a broad swath of currencies. Canada definitely benefited from that."

The Canadian dollar finished at C$1.0215 to the U.S. dollar, or 97.90 U.S. cents, up from Wednesday's finish at C$1.0243 to the U.S. dollar, or 97.63 U.S. cents.

The currency touched a session high of C$1.0155 to the U.S. dollar, or 98.47 U.S. cents, shortly after the release of the domestic data, before easing.

Also helping the commodity-linked currency's move higher was a bounce in the price of oil, which climbed toward $82 a barrel, while gold and base metal prices were also firmer. [O/R] [GOL/]

BONDS LOWER

Canadian government bond prices were down across the curve, tracking U.S. Treasuries lower as investors cut demand for safe-haven government debt as worries about euro zone debt levels eased [US/].

"Bonds are reacting to the same common factor which is higher equities, more risk-on appetite. We did have stronger data, but it was mostly global factors driving things," said Chandler.

The two-year bond sagged 8 Canadian cents to yield 1.634 percent, while the 10-year bond sank 23 Canadian cents to yield 3.613 percent.

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