Reuters: US Dollar Report: CANADA FX DEBT-C$ climbs to highest in over 12 months

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CANADA FX DEBT-C$ climbs to highest in over 12 months Sep 10th 2012, 16:00 Mon Sep 10, 2012 12:00pm EDT * C$ hits 12-month high at C$0.9755 vs US$, or $1.0251 * Bond prices little changed across the curve By Claire Sibonney TORONTO, Sept 10 (Reuters) - The Canadian dollar hit its loftiest level in more than one year against the greenback on Monday, outperforming other major currencies on last week's strong domestic employment report and hopes of more policy easing in the United States. The currency hit a session high of C$0.9755 to the U.S. dollar, or $1.0251, its strongest level since Sept. 1, 2011. "The risk backdrop remains positive here. The weaker-than- expected U.S. employment number has fueled the fire for the market looking for a potential nod to QE3 out of the Fed," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets. Canada on Friday reported the economy added 34,300 jobs in August, topping expectations of analysts surveyed by Reuters. Canada has recouped all the jobs lost in the recession, and employment is 176,600 higher than in August 2011, with most of the increases in full-time positions. By comparison, U.S. jobs growth slowed sharply in August. Nonfarm payrolls rose only 96,000, well below what would normally be needed to put a dent in the jobless rate and setting the stage for the Federal Reserve to pump additional money into the sluggish economy when it meets later this week. Traders also cited improved risk appetite in general after the European Central Bank last week unveiled a plan to cut borrowing costs for its most indebted countries. At 11:36 a.m. (1536 GMT), the Canadian dollar stood at C$0.9762 against the greenback, or $1.0244, firmer than Friday's North American session close at C$0.9782, or $1.0223. Perrier pointed to the next resistance level around C$0.9725, near the August 2011 high. Breaking through that could open up the way toward C$0.95 and then C$0.94. But many analysts are still skeptical that the Canadian dollar's recent rally has much further to go in the near term. "We're of the opinion that it may not well be so much of a done deal that the Fed does more QE," said Jeremy Stretch, head of currency strategy at CIBC in London. "So it may be the case that at this sort of levels there's potentially some small opportunities just to add to some (U.S.) dollar/CAD long positions on the basis that the U.S. dollar may well get a little bit of a post-Fed bounce," U.S. and global stocks dipped as investors cashed in some of last week's sharp gains ahead of a German ruling on the euro zone's new bailout fund, Dutch elections and the conclusion of the Fed's two-day policy meeting on Thursday. Weak economic data in China reinforced prospects for more stimulus measures there. Canadian government bond were little changed across the curve, with the two-year bond off half a Canadian cent to yield 1.179 percent and the benchmark 10-year bond up 6 Canadian cents, yielding 1.849 percent. Link this Share this Digg this Email Reprints

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