CANADA FX DEBT-C$ pulls back from near 3-month high
* Canadian dollar at C$1.0929 or 91.50 U.S. cents * Markets take risk-averse tone, U.S. dollar slides on dovish Fed * Bond prices higher across the maturity curve (Updates to close) By Andrea Hopkins TORONTO, April 10 (Reuters) - The Canadian dollar weakened against the greenback on Thursday, pulling back from a nearly three-month high in the previous session as investors consolidated positions after the currency's recent string of gains. The U.S. dollar dropped to three-week lows against the yen and the Swiss franc, sliding for a second straight day after minutes of the U.S. Federal Reserve's March meeting disappointed investors who had been positioned for an interest rate hike early next year. The Fed minutes also overshadowed U.S. data that showed first-time claims for jobless benefits fell more than expected last week to their lowest level since May 2007. The Canadian dollar was a laggard among major currencies, along with the Swedish crown and New Zealand dollar, helping the loonie weaken even as the U.S. dollar softened. "There has been a slow melt up in dollar-Canada since mid-morning. Equities are eroding, we're seeing some erosion in certain commodities - crude is down, reversing some gains earlier in the week," said Jack Spitz, managing director of foreign exchange at National Bank Financial. "Ultimately the market is squaring up positions in an environment that appears to be more risk averse." The Canadian dollar ended the North American session at C$1.0929 to the greenback, or 91.50 U.S. cents, weaker than Wednesday's close of C$1.0872, or 91.98 U.S. cents. The loonie, which came under intense selling pressure earlier in the year, has climbed about 3 percent since hitting a 4-1/2-year low in mid-March. Some signs of strength in the domestic economy have boosted sentiment, prompting investors to cover short positions. Spitz said the dollar-CAD would find topside resistance at C$1.0960, with "fairly decent" offer interest above C$1.10, and support between C$1.0910 and the C$1.0860 high seen earlier this week. With little on the domestic economic calendar in the coming days, investors are turning their attention to the Bank of Canada's policy-setting meeting next Wednesday. The central bank's more dovish tone has hit the loonie hard in the last few months and markets will be watching to see if its stance changes. Canadian government bond prices were higher across the maturity curve, with the two-year up 2.5 Canadian cents to yield 1.056 percent, and the benchmark 10-year up 25 Canadian cents to yield 2.438 percent. (Reporting by Andrea Hopkins, editing by G Crosse)
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