CANADA FX DEBT-GDP rebound pushes C$ higher on last day of tough quarter
* Canadian dollar at C$1.1055 or 90.46 U.S. cents * Bond prices mixed across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, March 31 (Reuters) - The Canadian dollar strengthened against the greenback on Monday, boosted by data that showed Canada's economy rebounded from a drop in December at a faster-than-expected pace in January. Still, the loonie was on track to mark its biggest quarterly downturn since 2011, largely due to the sharp hit the currency took in January. Canadian gross domestic product grew by 0.5 percent in January, bouncing back from a decline of 0.5 percent in December, when the economy was hampered by unusually harsh winter weather. The loonie had been on a strong footing heading into the GDP report and it touched a session high shortly after the data was released. While the report showed some underlying strength in the economy, the currency's move was likely a knee-jerk reaction from investors who have been bearish over Canadian data, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. "It essentially erases the decline we saw in December, so looking forward, it's not a huge surprise or really changes anything too much in the fundamental backdrop for the Canadian economy," Smith said. The Canadian dollar ended the North American session at C$1.1055 to the greenback, or 90.46 U.S. cents, stronger than Friday's close of C$1.1060, or 90.42 U.S. cents. It touched a session high of C$1.1002. Investors were also digesting comments from U.S. Federal Reserve Chair Janet Yellen, who said the central bank's "extraordinary" commitment to boosting the economy will be needed for some time to come. The Fed has been reducing its amount of stimulative bond purchases and the program is set to be wound down later this year. "If they continue to taper at $10 billon a month and it doesn't upset the apple cart, and we see some consistency in the economic data, then that could ultimately feed through and help Canada," said Gareth Sylvester, director at Klarity FX in San Francisco. "But we're talking about three, four, five months down the line versus tomorrow." The currency rebounded strongly last week from a recent 4-1/2 year low. Still, many analysts believe that a number of factors, including a sluggish economy and a dovish Bank of Canada, are likely to exert pressure on the loonie. For the quarter, the greenback appreciated 4.1 percent against the loonie, putting the Canadian dollar on track for biggest quarterly downturn since the third quarter of 2011. "We're still of the opinion the U.S. dollar-Canadian dollar the price action should be guided higher over the next two or three months toward that C$1.1450 to C$1.15 area," Sylvester said. Canadian government bond prices were mixed across the maturity curve, with the two-year up 1 Canadian cent to yield 1.068 percent, while the benchmark 10-year was off 10 Canadian cents to yield 2.458 percent. (Editing by Peter Galloway)
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