CANADA FX DEBT-C$ posts modest gain as crude rises, US$ eases
* Canadian dollar at C$1.2478 or 80.14 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, April 6 (Reuters) - The Canadian dollar made modest gains against its U.S. counterpart on Monday as the greenback fell against a group of currencies and oil prices jumped, but a late-session U.S. dollar surge knocked the loonie off its highs for the day. The U.S. dollar was hurt by disappointing nonfarm payrolls data on Friday that showed U.S. jobs growth was much weaker than expected in March, suggesting the Federal Reserve will hold off hiking interest rates until the second half of the year. "There was a knee-jerk reaction to take profits on those U.S. dollar longs," said Bipan Rai, director of foreign exchange strategy at CIBC World Markets. Rai said stops in the euro contributed to a late-session move in the U.S. dollar's favor. "Really, in our view, one bad apple doesn't really spoil the basket. You still had very strong job creation out of the U.S. in 2014. If we get a stronger print for April nonfarms, chances are markets will forget completely about what happened in March." The Canadian dollar ended the session at C$1.2478 to the U.S. dollar, or 80.14 U.S. cents. That was stronger than Friday's finish of C$1.2496, or 80.03 U.S. cents, based on Thomson Reuters Eikon data, and sharply up from the Bank of Canada's official close on Thursday of C$1.2564, or 79.59 U.S. cents. Trading has been thin since Good Friday, with many markets in the Americas and Europe closed for the Easter holidays. The loonie, which outperformed all its major counterparts on Monday, appears to be consolidating between C$1.24 and C$1.28, Rai said. The U.S. dollar's late rally limited the loonie's reaction to the higher price of crude, a key Canadian export. Oil prices surged more than 5 percent on speculation Iran might not increase oil exports much following its preliminary nuclear deal with world powers, and on expectations that a months-long rise in U.S. crude inventories may be slowing. Lower oil prices have dampened the overall sales outlook for Canadian companies, weighing on investment and hiring intentions, according to Bank of Canada's business outlook survey released on Monday. Canadian government bond prices were mixed across the maturity curve, with longer-term securities lower. The two-year price fell 1.5 Canadian cents to yield 0.501 percent and the benchmark 10-year slipped 36 Canadian cents to yield 1.351 percent. The Canada-U.S.two-year bond spread was 0.1. The 10-year spread was 54.8. (Reporting by Solarina Ho; Editing by Peter Galloway)
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