Canada dollar starts 2004 on high note

The Canadian dollar rose on Friday to near a 10-year high set earlier in the week as concern about the US current account deficit pulled the greenback lower against major world currencies.
Domestic bond prices fell as stronger equity markets eroded their lure as a safe-haven buy.
The Canadian dollar rose to C$1.2884 to the US dollar, or 77.61 US cents, compared with C$1.2965, or 77.13 US cents, at Wednesday's session close.
Financial markets were closed on Thursday for New Year's Day.
"If the euro rallies, the Canada rallies, and vice versa," said George Davis, director of global research at RBC Capital Markets.
The currency surged to a decade-high on Wednesday, which Davis said was in part due to year-end adjustments of corporate currency hedge books. The move was exaggerated by weak market volumes.
But with year-end adjustment out of the way, and only one piece of economic data for investors to scan, the session was quiet, analysts said.
The US Institute for Supply Management's monthly manufacturing index blew past expectations, jumping to 66.2 in December, up from November's 62.8, which was a previous 20-year high. A strengthening US manufacturing sector would drive up demand for Canadian exports and help Canadian firms.
The next high-profile Canadian economic release will be December jobs figures on January 9.
Canadian bond prices fell as a strong equity trading session pulled long-dated bonds lower. Also weighing on traders' minds is the upcoming Bank of Canada rate decision on January 20.
The market is tentatively pricing in a rate cut, although some expect the bank to stand pat.
A cut would likely boost bond prices, as their yields would look better in comparison. The two-year bond fell 7 Canadian cents to C$99.98 to yield 3.01 percent, while the 10-year bond fell C$1.20 to C$103.55 to yield 4.776 percent.
The yield spread between the two-year and 10-year bond moved to 176.6 basis points from 164.9 at the previous close.
The 30-year bond, due 2029, slid C$1.80 to C$106.10 to yield 5.309 percent. In the United States, the 30-year Treasury yielded 5.174 percent.
The three-month when-issued T-bill yielded 2.55 percent, unchanged from the previous close.