CANADA FX DEBT-C$ ticks higher, but China move hampers upside

Published 11/19/2010, 08:11 AM
Updated 11/19/2010, 08:16 AM

* C$ hair higher at 98.04 U.S. cents

* Bond prices largely flat

By Jennifer Kwan

TORONTO, Nov 19 (Reuters) - Canada's dollar firmed slightly against its U.S. counterpart on Friday but China's move to tighten monetary policy kept the currency trading in a narrow range.

China ordered lenders on Friday to lock up more of their money with the central bank for the second time in two weeks, stepping up its battle to pull excess cash out of the economy before inflation has a chance to take off. [ID:nL3E6MJ0N8]

"We have the rumors and then actual realization of a reserve requirement ratio hike for Chinese banks having the impact on markets and keeping commodity prices restrained. That's keeping us underperforming," said Sacha Tihanyi, currency strategist at Scotia Capital.

"It restrains monetary conditions in China. It would essentially help to slow down growth," he added.

At 7:45 a.m. (1245 GMT), the Canadian dollar was at C$1.0200 to the U.S. dollar, or 98.04 U.S. cents, up slightly from Thursday's finish at C$1.0215 to the U.S. dollar, or 97.90 U.S. cents.

Tihanyi also said investors were awaiting news about Ireland. The greenback softened as the euro edged higher, recouping earlier losses on expectations that Ireland was near a deal to get tens of billions of euros from its European partners and the IMF for its shattered banks. [FRX/] [MKTS/GLOB]

Ireland came under fresh pressure from euro zone partners on Friday to accept quick support for its banks. Dublin said it remained unclear for now how much its battered financial institutions required. [ID:nLDE6AI0QG]

Canadian government bond prices were largely flat across the curve, with the two-year bond up 1 Canadian cent to yield 1.634 percent, while the 10-year bond was down 5 Canadian cents to yield 3.132 percent.

(Editing by Chizu Nomiyama)

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