CANADA FX DEBT-C$ firms on stronger U.S., China data
* C$ at $0.9945 vs US$, or $1.055 * U.S., China PMI data boosts sentiment * Euro zone manufacturing data weighs * Investors look to Bank of Canada speech for clues * Bond prices mostly higher By Jon Cook TORONTO, April 2 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday after upbeat manufacturing data from the U.S. and China showed the world's top two economies continued to expand and helped offset fears about further slowing in Europe. Commodity-linked currencies were boosted after data on Sunday showed China's official Purchasing Managers' Index (PMI) jumped to an 11-month high in March, beating forecasts. On Monday, sentiment was further strengthened by data that revealed U.S. manufacturing activity in March rose to 53.4 from 52.4 in February, topping economists' expectations of 53.0. A reading above 50 indicates expansion, while a number below 50 means contraction. "We started out with a bit of a cautious start and when we saw that (U.S.) number things turned around," said Steve Butler, a director of foreign exchange trading at Scotia Capital. "All that is pretty positive for Canada in the short term." The Canadian dollar firmed to a session high at C$0.9935 against the U.S. currency, or $1.0065, after the U.S. data. It was at C$0.9977 shortly before the data was released. At 10:45 a.m. (1445 GMT), the Canadian dollar stood at C$0.9945 against the U.S. dollar, or $1.0054, up from Friday's close at C$0.9975 versus the greenback, or $1.0025. Investors were expected to take further direction from a speech and press conference on Monday by Bank of Canada Governor Mark Carney. The central bank chief is speaking on exporting in a post-crisis world and could discuss the outlook for growth and the central bank's latest view on the strong currency. A recent reduction in China's growth target and softening U.S. data had taken some of the shine off commodities and weakened the Canadian dollar. Canada's manufacturing sector also accelerated to its fastest rate of the year in March, showed the RBC Canadian Manufacturing Purchasing Managers' Index, released on Monday. Oil, gold and copper prices rose with the news. Helping pare gains, was soft euro zone manufacturing data that continued to signal a grim outlook for the region. Also weighing on sentiment was separate U.S. data that showed U.S. construction spending in February recorded its largest drop in seven months. "Regardless of the Chinese numbers, the overall mood today is not all that constructive," said Shaun Osborne, chief currency strategist at TD Securities. "Since January, we've essentially been stuck in this range around parity and that's not going to change anytime soon," said Osborne. Canadian bond prices were mostly higher. The 2-year bond was up 2 Canadian cents to yield 1.186 percent, while the 10-year bond rose 9 Canadian cents to yield 2.101 percent.
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