CANADA FX DEBT-C$ strengthens as oil climbs above $50 a barrel
(Adds analyst quotes and details on Ivey PMI, updates prices) * Canadian dollar at C$1.2771, or 78.30 U.S. cents * Loonie hit its strongest since May 4 at C$1.2753 * Bond prices higher across the maturity curve By Fergal Smith TORONTO, June 7 (Reuters) - The Canadian dollar strengthened to a one-month high against its U.S. counterpart on Tuesday after oil prices climbed above $50 a barrel and 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. "We had a lot of people that were long U.S. dollars and they are exiting their positions, so that's exacerbating the move towards a higher loonie," said Rahim Madhavji, president of KnightsbridgeFX.com. Oil prices reached 2016 highs on expectations of a domestic stockpile draw and worries about global supply shortfalls from attacks on Nigeria's oil industry. U.S. crude settled up 67 cents at $50.36 a barrel, the first time it had settled above $50 in almost a year. The Canadian dollar closed at C$1.2771 to the greenback, or 78.30 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$1.2753. The Canadian dollar's rally may have "some legs" in the short-term said Madhavji, but he doubted it would revisit the 10-month high it reached a little more than one-month ago at C$1.2461. The pace of purchasing activity in Canada slowed in May as measures of employment and inventories both contracted, according to Ivey Purchasing Managers Index data. 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 higher across the maturity curve, with the two-year price up 4 Canadian cents to yield 0.526 percent and the benchmark 10-year rising 20 Canadian cents to yield 1.217 percent. On Friday, the 10-year yield hit its lowest in nearly two months at 1.175 percent. (Reporting by Fergal Smith; Editing by Andrew Hay)
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