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C$ touches its strongest since March 3 at 1.3560
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Canadian bond yields trade mixed across curve
(Adds strategist quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, March 29 (Reuters) - The Canadian dollar
strengthened to its highest level in nearly four weeks against
its U.S. counterpart on Wednesday as a recovery in risk appetite
raised pressure on speculators that have raised bearish bets on
currency.
The loonie was trading 0.2% higher at 1.3570 to the
greenback, or 73.69 U.S. cents, after touching its strongest
since March 3 at 1.3560.
"A number of points seem to be coming together to support
the Canadian dollar and potentially open the door to a bit more
strength," said Shaun Osborne, chief currency strategist at
Scotiabank, noting the recovery in risk appetite, a pickup in
Canadian oil prices and extreme bearish positioning in the
currency.
Data from the U.S. Commodity Futures Trading Commission
shows that speculators have raised their bearish bets on the
loonie to the most since January 2019. "The fact that CAD is actually strengthening now, we
probably will see a bit more short covering, particularly if we
can close quite strongly on the day-to-day and potentially on
the week as well," Osborne said.
Equity markets globally rose as worries receded that
financial stress could lead to a credit crunch that would be too
much for the global economy to handle.
The Bank of Canada is ready to step in with support if the
banking system comes under severe strain, but now it is not even
close to being worried about the health of the financial system,
Deputy Governor Toni Gravelle said.
Meanwhile, Canadian Finance Minister Chrystia Freeland's
promise of a fiscally prudent budget in the face of high
inflation has disappointed some strategists who had hoped for
spending restraint from the Liberal government.
Canadian government bond yields were mixed across the curve.
The two-year rose 1.5 basis points to 3.754%, while the 10-year
was down nearly 1 basis point at 3.935%.
(Reporting by Fergal Smith; Editing by Sharon Singleton)
