CANADA FX DEBT-C$ strengthens in commodity-linked rally
* Canadian dollar at C$1.2207, or 81.92 U.S. cents * Bond prices lower across the maturity curve By Alastair Sharp TORONTO, June 10 (Reuters) - The Canadian dollar strengthened further against its U.S. counterpart on Wednesday, boosted by a rise on oil prices as volatility in currency markets favored the commodity-linked loonie. Also putting pressure on the greenback, the Japanese yen soared after the country's central bank chief called it "very weak." The Canadian and Australian dollars both gained 1 percent against the U.S. currency on oil gains. Crude rose after a report of falling U.S. inventories and signs that U.S. oil production growth was leveling off after several years of very sharp increases. "It's creating an environment whereby currencies, most noticeably commodity-bloc currencies, are gaining quite substantially," said Jack Spitz, managing director of foreign exchange at National Bank Financial. The Canadian dollar was at C$1.2207 to the greenback, or 81.92 U.S. cents, by mid-morning, stronger than Tuesday's close of C$1.2346, or 81.00 U.S. cents. At one point almost touching C$1.22, the loonie was at its strongest level since May 22. Spitz said that with stops below C$1.23 triggered, a move toward the late-May low of C$1.2175 or even to C$1.20 was possible. "It may be short-lived," he said. "It's really going to depend on whether or not crude pricing, or commodity pricing in general, maintains some momentum to its current bid." Canadian government bond prices were weaker across the maturity curve, with the two-year down 2 Canadian cents to yield 0.675 percent and the benchmark 10-year down 15 Canadian cents to yield 1.897 percent. (Editing by Lisa Von Ahn)
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