CANADA FX DEBT-C$ strengthens as oil climbs above $50 a barrel
* Canadian dollar at C$1.2786, or 78.21 U.S. cents * Loonie hit its strongest since May 4 at C$1.2760 * Bond prices mixed across the maturity curve TORONTO, June 7 (Reuters) - The Canadian dollar strengthened to a one-month high against its U.S. counterpart on Tuesday as oil prices climbed above $50 a barrel and after bets for U.S. interest rate hikes were lowered following disappointing U.S. jobs data last week. The loonie's gains came after Federal Reserve Chair Janet Yellen on Monday called the latest U.S. jobs numbers disappointing and opted not to repeat her recent message that rates could rise again in the coming months. Oil prices reached their highest in eight months, buoyed by recent weakening in the U.S. dollar and by falling Nigerian oil output after a spate of attacks on infrastructure. U.S. crude prices were up 0.97 percent at $50.17 a barrel. At 9:15 a.m. EDT (1315 GMT), the Canadian dollar was trading at C$1.2786 to the greenback, or 78.21 U.S. cents, stronger than Monday's official close of C$1.2807, or 78.08 U.S. cents. The currency's weakest level of the session was C$1.2838, while it touched its strongest since May 4 at C$1.2760. Canadian dollar-implied volatility, which traders use to price options on the currency, fell further since Friday's U.S. jobs data. For three-month options, implied volatility was at 9.1 percent, its lowest since January. Just one month ago, it was at 11.5 percent. In domestic data, the Ivey Purchasing Managers Index for May will be released at 10:00 a.m. EDT (1400 GMT). It is expected to weaken to 51.5 in from 53.1 in April, according to a Reuters poll. Canadian employment data for May will be released at the end of the week. The report comes after a wildfire last month cut production in Alberta's oil sands region. The Bank of Canada has said it expects damage from the wildfires to shave 1.25 percentage points off economic growth in the second quarter. Canadian government bond prices were mixed across the maturity curve, with the two-year price up 1.5 Canadian cents to yield 0.54 percent and the benchmark 10-year rising 8 Canadian cents to yield 1.23 percent. Still, the 10-year yield has rebounded from its lowest in nearly two months on Friday at 1.175 percent. (Reporting by Fergal Smith; Editing by Bernadette Baum)
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