Reuters: US Dollar Report: CANADA FX DEBT-C$ at 2-mth high vs US$ amid risk rally

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CANADA FX DEBT-C$ at 2-mth high vs US$ amid risk rally Jul 19th 2012, 12:18 Thu Jul 19, 2012 8:18am EDT * C$ hits high of C$1.0069 vs US$, or 99.31 U.S. cents * Bond prices edge lower across the curve By Claire Sibonney TORONTO, July 19 (Reuters) - The Canadian dollar climbed to a more than two-month high against the U.S. dollar on Thursday, eyeing parity again as it benefited from positive global equities amid a busy reporting calendar and broad weakness in the greenback. Pressure remained on the U.S. dollar after Federal Reserve Chairman Ben Bernanke kept alive talk of more monetary easing in the second stage of his testimony to the U.S. Congress on Wednesday, which also boosted commodities priced in U.S. dollars. "What we see today really is a combination of just generalized U.S. dollar weakness against most of the G10 currencies and a moderately better tone for risk and all of that adds up really to (U.S.) dollar/Canada being lower," said Adam Cole, global head of FX strategy at RBC Capital Markets in London. Meanwhile, the Bank of Canada kept its rate-hike stance in the previous session, despite other major advanced economies moving in the opposite direction. Higher interest rates typically help a country's currency appreciate because they often attract international capital flows. Traders also looked to equities for direction on growth-related currencies like Canada's. European shares hit 11-week highs as second-quarter company results lifted sentiment, while U.S. stock futures also pointed to a firmer open after the S&P 500 touched its highest level since early May on Wednesday. On the data front, investors will watch Canadian wholesale trade for May, and U.S. weekly jobless claims, home sales and factory activity later in the day. At 8:03 a.m. (1203 GMT), the Canadian dollar stood at C$1.0076 against the U.S. dollar, or 99.25 U.S. cents, firmer than Wednesday's North American finish at C$1.0107 versus its U.S. counterpart, or 98.94 U.S. cents. Earlier, the domestic currency touched C$1.0069, or 99.31 U.S. cents, its strongest level compared to the greenback since May 16. After closing through the 200-day moving average on Wednesday, Cole noted, the Canadian dollar could revisit parity - a psychological resistance level - against its U.S. counterpart in the near term, as long as risk appetite continues to improve. Before that, it would have to test a retracement level around C$1.0050. Against the euro, Canada's dollar was near a record peak hit earlier this week, hitting an intraday high of C$1.2374, or 80.81 euro cents. A sharp rise in Spain's borrowing costs on Thursday sent the euro broadly lower. Despite all the efforts by Madrid to cut its budget deficit and tackle problems in its banking system, government bond yields rose sharply at an auction of two- to seven-year debt. Canadian bond prices dropped across the curve, with the two-year government bond off 2 Canadian cents to yield 0.971 percent, and the benchmark 10-year bond down 18 Canadian cents to yield at 1.639 percent. Link this Share this Digg this Email Reprints

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