CANADA FX DEBT-C$ strengthens with oil prices, risk appetite

Wed Mar 26, 2014 4:39pm EDT

* Canadian dollar at C$1.1084 or 90.22 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds details, quote, updates prices)
    By Leah Schnurr
    TORONTO, March 26 (Reuters) - The Canadian dollar firmed
against the greenback on Wednesday, rising alongside a gain in
oil prices and an overall improvement in risk appetite in the
market.
    Worries over geopolitical tensions eased after leaders of
the Group of Seven major industrialized nations agreed this week
to hold off on sanctions targeting Russia's economy unless
President Vladimir Putin takes further action to destabilize
Ukraine or other former Soviet republics.
    The United States and European Union agreed on Wednesday,
however, to work together to prepare possible tougher sanctions,
a move the market took in stride. 
    The brightening of sentiment helped the loonie continue to
consolidate after it fell to a 4-1/2 year low last week. It has
risen for the past four session. The selloff was sparked by more
dovish-than-expected comments from Bank of Canada Governor
Stephen Poloz and concerns about the possibility of a faster
timetable for raising interest rates in the United States.
    "Last week, any reason was good to sell the Canadian
dollar," said Charles St-Arnaud, Canadian economist and currency
strategist at Nomura Securities International in New York.
    "The reaction (to Poloz) was probably too strong, so having
some type of consolidation this week would make sense."
    With no major economic data on the calendar until next week,
analysts said the Canadian dollar is likely to be confined to a
tight range.
    "There's no catalyst for the loonie in the near term, so
we're still expecting to see a lack of momentum in the short
term and a lot of range-bound trading," said Rahim Madhavji,
president at KnightsbridgeFX.com in Toronto.
    The Canadian dollar ended the North American
session at C$1.1084 to the greenback, or 90.22 U.S. cents,
firmer than Tuesday's close of C$1.1159, or 89.61 U.S. cents.
    Overnight, the loonie had risen alongside other growth and
commodity currencies, including the Australian dollar, after
Australia's top central banker played down the risk of a
sustained rise in domestic inflationary pressures.
 
    Reserve Bank of Australia Governor Glenn Stevens did not
make any mention in his speech of the Australian dollar being
too strong, but he later said he expects the currency to weaken.
 
    A rise in oil prices helped the Canadian dollar regain
momentum in the later part of Wednesday's session. U.S. crude
oil futures settled up $1.07 at $100.26 a barrel.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1.6 Canadian
cents to yield 1.060 percent. The benchmark 10-year 
was up 34 Canadian cents to yield 2.444 percent.

 (Editing by Peter Galloway)
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