CANADA FX DEBT-C$ strengthens to an 11-day high as oil rallies
* Canadian dollar at C$1.2925, or 77.37 U.S. cents * Bond prices lower across the maturity curve TORONTO, April 11 (Reuters) - The Canadian dollar strengthened to an 11-day high against its U.S. counterpart on Monday as higher oil prices improved the outlook for Canada's economy ahead of the Bank of Canada interest rate announcement mid-week. Oil prices rose despite doubts that a meeting of producers in Doha next Sunday will improve the demand-supply balance. U.S. crude prices were up 1.06 percent to $40.14 a barrel. The Bank of Canada is widely expected to hold interest rates at 0.5 percent on Wednesday. After a run of better-than-expected economic data at the start of the year, the central bank is expected to raise its growth forecasts, which will also incorporate the anticipated impact from the government's recently announced stimulus measure. Data on Friday showed the economy created 40,600 jobs in March, far surpassing economists' expectations. The implied probability of a Bank of Canada interest rate cut this year has dropped to 10 percent from 20 percent before the jobs data. It was more than 50 percent at the start of March. At 9:41 a.m. EDT (1341 GMT), the Canadian dollar was trading at C$1.2925 to the greenback, or 77.37 U.S. cents, stronger than Friday's official close of C$1.3002, or 76.91 U.S. cents. The currency's weakest level of the session was C$1.3015, while C$1.2925 was its strongest since March 31. Speculators have turned bullish on the Canadian dollar for the first time since May last year, Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions stood at 97 contracts in the week ended April 5, swinging from net short 6,180 contracts in the prior week. At the end of January, net short exposure was the largest in five months at 66,819 contracts. Canadian government bond prices were lower across the maturity curve in sympathy with U.S. Treasuries as U.S. stocks rallied. The two-year price fell 2 Canadian cents to yield 0.577 percent and the benchmark 10-year was down 32 Canadian cents to yield 1.264 percent. The curve steepened, as the spread between the 2-year and 10-year yields widened by 2.6 basis points to 68.7 basis points, indicating underperformance for longer-dated maturities. (Reporting by Fergal Smith; Editing by Nick Zieminski)
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