CANADA FX DEBT-C$ picks up on hope for Greek vote

Mon May 28, 2012 8:12am EDT

* C$ at C$1.0241 vs US$, or 97.65 U.S. cents
    * Bond prices slip across the curve

    By Claire Sibonney	
    TORONTO, May 28 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Monday, recovering from a
four-and-a-half month low hit in the previous session as Greek
polls showed growing support for pro-bailout parties. 	
    Global share markets, commodities and the euro were all
recovering from steep falls last week, when investors fled to
the safety of the U.S. dollar on mounting concerns about Greece,
Spain's banking sector, and a lack of immediate policy responses
from European leaders.	
    Greek opinion polls pointed to victory for the conservative
New Democracy party in the June 17 election, making it more
likely the next Greek government will stick to bailout terms
agreed with the European Union and the International Monetary
Fund, enabling Greece to stay in the euro. 	
    "The market has decided to stop catastrophizing Greece ...
and the market is taking that as a catalyst perhaps to start
pulling back on its extreme long (U.S.) dollar positioning,"
said Jack Spitz, managing director of foreign exchange at
National Bank Financial.	
    Ho noted however that trading was subdued by the long U.S.
holiday weekend with U.S. financial markets closed on Monday for
the Memorial Day holiday.	
    At 8:03 a.m. (1203 GMT), the Canadian dollar stood
at C$1.0241 versus the U.S. dollar, or 97.65 U.S. cents,
stronger than Friday's North American session close at C$1.0295
against the U.S. dollar, or 97.13 U.S. cents.	
    Later in the week, U.S. employment and housing data,
domestic growth numbers and an Irish vote on the European
Union's new fiscal treaty will drive further direction for risk
sentiment.	
    End-of-month portfolio rebalancing may also affect currency
markets with U.S. dollar buying on the back of weaker equity
performance globally.	
    Spitz said he doesn't expect the Canadian dollar to
strengthen much beyond C$1.02 on Monday, and the next resistance
levels for the currency are seen near C$1.01-C$1.0150 and the
20- and 200-day moving averages around C$1.0077-C$1.0081.	
    Canadian government bond prices edged lower across the curve
with the two-year bond down 4 Canadian cents to yield
1.090 percent, while the benchmark 10-year bond was
down 13 Canadian cents to yield 1.814 percent.
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