CANADA FX DEBT-C$ firmest in over a week in quiet trading

Wed Jun 11, 2014 4:37pm EDT

* Canadian dollar at C$1.0867 or 92.02 U.S. cents
    * Bond prices rise across the maturity curve

    By Solarina Ho
    TORONTO, June 11 (Reuters) - The Canadian dollar
strengthened against the U.S. dollar, breaking through a
near-term support level to touch its firmest in over a week
Wednesday, helped in part by low volatility and investor
interest in commodity currencies.
    Canada was also stronger against most other major
currencies. The Canadian dollar was approaching levels not seen
since January against the euro, which has been under pressure
due to a widening yield gap between euro zone bonds and their
major peers.
    "Some of the cross-plays have been favorable to Canada,"
said Darcy Browne, Managing Director, Capital Markets Trading,
CIBC, noting that the currency broke a support level of
C$1.0880.
    "The commodities-based currencies are more or less trading
better of late. Some of it obviously because the euro is being
sold ... It's flows being unwound relatively to euro and some
other currencies that may not be trading very well at the
moment."
    The Canadian dollar was at C$1.0867 versus the
greenback, or 92.02 U.S. cents, stronger than Tuesday's close of
C$1.0904, or 91.71 U.S. cents.
    This was its strongest since June 2, when it touched
C$1.0838 during the session.
    "I think it's just a byproduct of the very low volatility
environment that we seem to be in," said Adam Cole, global head
of FX strategy at RBC Capital Markets in London.
    The currency could see more activity on Thursday, when the
United States reports its monthly retail sales data and Bank of
Canada's Stephen Poloz could make comments about the currency or
monetary policy during a press conference.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1 Canadian cent
to yield 1.075 percent and the benchmark 10-year 
rising 4 Canadian cents to yield 2.344 percent.

 (Reporting by Solarina Ho; Editing by Bernadette Baum and James
Dalgleish)
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