CANADA FX DEBT-C$ firms as U.S. data outweighs Ukraine tension
* Canadian dollar at C$1.0952 or 91.31 U.S. cents * Bond prices mostly lower across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, May 5 (Reuters) - The Canadian dollar firmed against the greenback on Monday, overcoming early weakness as better-than-expected U.S. economic data offset concerns about the ongoing tension in Ukraine. Still, the loonie stuck to its recent range around C$1.10 to the U.S. dollar. Analysts don't expect it to stray far from that level until domestic economic reports on the trade balance and labor market are released later in the week. Ukraine sent special forces into the southern port city of Odessa following a weekend of violence that killed dozens. Meanwhile, pro-Russian rebels shot down a Ukrainian helicopter amid fighting near the eastern town of Slaviansk. The developments weighed on the loonie early in the day as investors sought safety in the greenback. Market risk appetite has waxed and waned in the past few months depending on whether the Ukraine crisis has been seen as intensifying or dissipating. The currency shrugged off the session's initial weakness after data showed growth in the large U.S. services sector picked up in April, rising at the fastest pace in eight months. "What's good for the U.S. is good for Canada," said Rahim Madhavji, president at KnightsbridgeFX.com in Toronto. "So, the loonie is really benefiting from strong data in the U.S. and positive risk sentiment ... but it's still very close to the C$1.10 range, which it has been for several weeks now." The Canadian dollar ended the North American session at C$1.0952 to the greenback, or 91.31 U.S. cents, stronger than Friday's close of C$1.0980, or 91.07 U.S. cents. Overnight, data showed activity in China's manufacturing sector contracted for a fourth month in a row in April, underscoring the view that China's economy has lost momentum. The loonie is often affected by data from China, which is the world's second-largest economy and a major consumer of natural resources. The economic data at home this week will be watched for what impact it may have on the direction of Bank of Canada monetary policy. The central bank has taken a neutral stance since last October and has flagged its concern about weak inflation and exports. Among the major economic reports on tap this week are trade balance numbers, which will be released on Tuesday, while the labor market report will close out the week on Friday. "The big thing people are watching for tomorrow are the trade balance numbers," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. "They're going to be a big driver, with the Bank of Canada focusing so much on export growth." Canadian government bond prices were mostly lower across the maturity curve, with the two-year off 1-1/2 Canadian cents to yield 1.074 percent, and the benchmark 10-year down 18 Canadian cents to yield 2.372 percent. (Editing by Peter Galloway)
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