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CANADA FX DEBT-C$ closes higher on resources, risk-taking

Published 12/01/2009, 04:42 PM
Updated 12/01/2009, 04:45 PM
GC
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* C$ ends up at 95.54 U.S cents

* Hits 6-week high above 96 U.S. cents

* Rising resources, stocks, Aussie rate hike whet appetite

* Large corporate debt deals abound (Adds details)

By Ka Yan Ng

TORONTO, Dec 1 (Reuters) - The Canadian dollar pushed higher again on Tuesday, getting a boost from record gold and stronger oil prices, and on a renewed appetite for risk after worries over Dubai's debt waned.

Jitters about Dubai's debt subsided after state conglomerate Dubai World, the center of the debt storm, said its planned restructuring of some units involved a lower than expected $26 billion in debt.

"Given that it's considerably lower than what the market was expecting, we saw a nice rebound in terms of risk-seeking behavior," said George Davis, chief technical analyst at RBC Capital Markets.

"With the (U.S.) dollar generally trading to the weaker side of the ledger against all the major currencies, except the yen, we've seen some continued downside follow-through down towards the C$1.04 area," said Davis.

The currency rose as high as C$1.0406 to the U.S. dollar, or 96.10 U.S. cents, its highest level since Oct. 21, as global equities climbed steeply as Dubai worries eased, and gold hit a record above $1,200 an ounce. The price of oil, a key Canadian export, was also higher, holding above $78 a barrel. [MKTS/GLOB] [GOL/] [O/R]

An interest rate hike in Australia also sharpened risk appetite. [ID:nSYD393465]

The Canadian dollar finished at C$1.0467 to the U.S. dollar, or 95.54 U.S cents, up from C$1.0556 to the U.S. dollar, or 94.73 U.S. cents, on Monday.

The move higher extended gains made on Monday after numbers showed Canada officially exited recession. [ID:nN30349047]

Although the currency is on another run higher, Ottawa is unlikely to have to take special measures to curb the rise, such as those taken on the yen by Japan, Finance Minister Jim Flaherty said on Tuesday. [ID:N01499613]

The Bank of Japan announced more measures to ease monetary policy to help the ailing economy following an emergency meeting, while holding interest rates at 0.1 percent. [ID:nTKZ006325]

BONDS FALL

The renewed risk appetite pushed up stocks and took attention away from the relative safety of Canadian government bonds, while several large debt issues were also absorbed.

Dec. 1, and the period around it, tends to be a time when investors are a bit more flush with cash because of maturing government bonds and coupon payments.

Big debt issuers on Tuesday included C$500 million from Caisse Centrale Desjardins and C$1 billion from Telus Corp, and the market was expected to see more deals in coming weeks before holidays thin out liquidity. [CAN-ISU]

"Just chalk it down to a heavy calendar of new issuance," said Sheldon Dong, fixed income analyst at TD Waterhouse Private Investment.

"Any issuer that needs to borrow money is probably going to come to market soon. We also had a fairly large Dec. 1 coupon payment that probably needs to be reinvested so investors are looking for a place to place money."

Data on Tuesday was a mixed bag as the U.S. manufacturing sector grew for a fourth straight month in November, but at a slower than expected pace, while further signs emerged of a stabilizing U.S. housing market. [ID:nN01398224]

The two-year government bond dipped 1 Canadian cent to C$100.29 to yield 1.103 percent, while the 10-year bond fell 28 Canadian cents to C$103.97 to yield 3.259 percent. ((kayan.ng@thomsonreuters.com; Reuters Messaging: kayan.ng.reuters.com@reuters.net; 416-941-8109)) ============================================================== FOR CANADIAN MARKETS NEWS, CLICK ON CODES IN BRACKETS: Canadian dollar and bonds report....[CAD/][CA/] TSX market report..........[.TO] Headlines from global forex markets ...[FXNEWS] Bank of Canada weekly t-bill auction...[CA/BIL] Bank of Canada securities auctions.....[CA/AUC] Bank of Canada interest rate story.....[CA/INT] Reuters monthly Canadian dollar poll.. [CAD/POLL] Canadian interest rate poll...........[CA/POLL] Reuters G7 quarterly economy poll....[ECILT/CA] Weekly economic data poll......[ECI/CA][ECI/CI] Reuters global stocks poll (Canada)... [EPOLL/CA] Top News: Canada ......[TOP/CAN] Today in Canada.......[CA/DIARY] Canadian debt and money news ....[D-CAN][M-CAN] FOR CANADIAN MARKETS DATA, CLICK ON CODES IN BRACKETS: Real-time Canadian economic RICS....... Canadian dollar quote............ Canadian bonds quote..<0#CABMK=> Canadian money market quote...<0#CAMMKT=> Canada-Treasury spread rates........ Canadian Debt and Forex speed guide........... Canadian Equities speed guide....... S&P/TSX Composite index ..............<.GSPTSE> FOR MAIN GLOBAL MARKET DATA AND MARKET REPORTS: FTSE Eurotop 300 .....<.FTEU3> European report .......[.EU] Nikkei 225.............<.N225> Tokyo report............[.T] FTSE 100...............<.FTSE> London report...........[.L] Xetra DAX.............<.GDAXI> Frankfurt market stories[.F] CAC-40..<.FCHI> Paris market stories...[.PA] World Indices.......<0#.INDEX> Foreign exchange........[FRX/] Oil.......[O/R] US Treasuries........... [US/] International bonds.....[EUB/] Gold.........[GOL/X] or [GOL/] CRB index of commodity futures.........[CRB/] All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ World central bank news [CEN] Economic Forecasts... Official rates...[INT/RATE] Forex Diary.......[MI/DIARY] Top events........[M/DIARY] Diaries...........[DIARY] Diaries Index........[IND/DIARY] Press Digests.....[PRESS] Polls on G7 economies..[SURVEY/]

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