CANADA FX DEBT-C$ firms a bit as ECB moves sharpen risk appetite

Thu Jun 5, 2014 9:40am EDT

* Canadian dollar at C$1.0935 or 91.45 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, June 5 (Reuters) - The Canadian dollar rose
modestly against the greenback on Thursday, boosted by an
increase in investor risk appetite after the European Central
Bank announced further actions to boost the euro zone economy.
    The loonie gained against the euro as ECB President Mario
Draghi said the central bank will offer banks a targeted
long-term refinancing operation (LTRO) to persuade them to lend.
Draghi also said the ECB was preparing to purchase asset-backed
securities in the future. 
    The ECB had earlier announced it would cut interest rates,
imposing negative rates on its overnight depositors. Against the
Canadian dollar, the euro was down at C$1.4816.
 
    "Draghi has always notably over-promised and
under-delivered, and tries to use his words more than anything,
so to come through with action today, it's obviously caught the
market a little bit by surprise," said Scott Smith, senior
market analyst at Cambridge Mercantile Group in Calgary.
    "They've definitely done a good job throwing a lot of weight
behind it."
    The announcement sharpened investor appetite for risky
assets, lifting higher-yielding assets including
commodity-related currencies, Smith said. 
    The Canadian dollar was at C$1.0935 to the
greenback, or 91.45 U.S. cents, a tad stronger than Wednesday's
close of C$1.0939, or 91.42 U.S. cents.
    Canadian economic data had little impact on the loonie as
the value of building permits rose in April but fell short of
expectations. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year off half a Canadian
cent to yield 1.067 percent and the benchmark 10-year
 down 15 Canadian cents to yield 2.368 percent.

 (Editing by Peter Galloway)
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