CANADA FX DEBT-C$ rebounds as oil, overseas worries support

Mon Mar 21, 2011 8:43am EDT

   * C$ firms to C$0.9764, or $1.0242
 * Bond prices slip in return to risk
 By Solarina Ho
 TORONTO, March 21 (Reuters) - The Canadian dollar rebounded
on Monday from last week's sell-off against its U.S.
counterpart as firm commodity prices and developments in
strife-torn Libya and quake-stricken Japan bolstered the
currency.
 Oil, a key driver for the commodity-linked Canadian dollar,
rose following a wave of U.N.-mandated airstrikes on Libya and
as unrest in the Middle East fueled worries about the region's
oil supply. For more see [O/R] and [ID:nLDE72J0RL].
 Concerns about a nuclear power station crisis in Japan
eased somewhat, lifting market sentiment, while the yen
extended losses amid wariness of more coordinated selling of
the Japanese currency by the Group of Seven nations. [FRX/]
 "We had a bit of a hiccup last week," said Steve Butler,
director of foreign exchange trading at Scotia Capital.
 "The market was a little concerned about the macro events
going on and we saw a big sell-off in the Canadian dollar. Now
we've basically recovered all of our lost ground from last
week."
 At 8:26 a.m. (1226 GMT), the currency CAD=D4 stood at
C$0.9764 to the U.S. dollar, or $1.0242, up from Friday's North
American finish of C$0.9861 to the U.S. dollar, or $1.0141.
 Given the currency's firm gains in quiet trade for most of
the major currencies, Butler saw limited further gains, with
resistance around the C$0.9710 range and support near
C$0.9800.
 "Now that things have settled down globally -- not that
we're out of the woods by any stretch of the imagination ...
it's help settle the markets a little bit," said Butler.
 Retail sales data will provide more clues into how well the
Canadian economy is faring and provide further direction for
the Canadian dollar.
 The federal budget report on Tuesday will also be in focus,
but Butler doesn't expect any dramatic moves.
 "The market may be a little bit unsettled if we do get that
no-confidence vote, but I'm not sure the market will take it
too hard given the relatively stable political environment of
Canada," said Butler.
 Canadian bond prices fell across the curve, in step with
U.S. Treasury prices, which dipped as risk appetite improved
over progress in Japan's nuclear crisis and hope that
intervention in Libya could help ease tensions. [US/]
 The interest rate-sensitive two-year bond CA2YT=RR was
down 10.5 Canadian cents to yield 1.663 percent, while the
10-year bond CA10YT=RR slipped 16 Canadian cents to yield
3.19 percent.
 (Editing by James Dalgleish)






















































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