Thu Sep 27, 2012 2:33pm EDT
* C$ at C$0.9795 vs US$, or $1.0209 * Spain announces economic reforms and 2013 budget * China's central bank adds biggest weekly cash injection * Bond prices mostly fall By Solarina Ho TORONTO, Sept 27 (Reuters) - Canada's dollar firmed against the U.S. currency on Thursday, tracking gains in commodity prices and stock markets, helped by signs China might take more action to boost its economy and Spain's latest efforts to deal with its debt crisis. Spain, the euro zone's fourth largest economy, announced a detailed timetable for economic reforms and a tough 2013 budget based mostly on spending cuts in what many see as an effort to pre-empt the likely conditions of an international bailout. "(The market) realized well, maybe, they don't have go to the EU (European Union) and it's not such a bad thing. I think that's really what turned the market around," said Steve Butler, managing director of foreign exchange trading at Scotiabank. "The biggest worry is that if they go to the EU and they really get their backs to the wall then they're stuck with an austerity program that may or may not work for them. So if they can do it themselves, then everybody feels like that's a better solution." Riskier assets were already cheered overnight by news that China's central bank had added its biggest weekly cash injection in history, aimed at preventing a potential short-term liquidity crunch at commercial banks. "The headline overnight got the market on the right foot," said Butler. "With that we've seen stocks in positive territory all day, but Canada wasn't really appreciating ... we probably should've been doing better earlier in the day and we finally caught up." At 2:03 p.m. (1803 GMT), the Canadian dollar was trading at C$0.9795 to the U.S. dollar, or $1.0209, up from Wednesday's North American session close of C$0.9852, or $1.0150. It touched a session high of C$0.9792,or $1.0212 earlier. The currency was also supported by a jump in the price of gold and oil. Oil prices rose as tensions between Iran and the West stoked concerns about crude supplies, while refinery maintenance and low inventory levels drove U.S. gasoline futures to their highest since April. Canadian government bond prices were mostly lower. The two-year bond was down 2.5 Canadian cents to yield 1.102 percent, while the benchmark 10-year bond lost 13 Canadian cents, yielding 1.759 percent.