CANADA FX DEBT-C$ strengthens to an 11-day high as oil rallies
(Adds analyst quotes and details on resistance levels, updates prices) * Canadian dollar at C$1.2899, or 77.53 U.S. cents * Loonie touched its strongest since March 31 at C$1.2885 * Bond prices mixed across the maturity curve By Fergal Smith 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. A run of better-than-expected economic data at the start of the year has also been supportive of the loonie, including employment data on Friday showing the creation of 40,600 jobs in March. "You've got a huge economic growth swing from favoring the U.S. just in mid-February to now favoring Canada," said Michael Goshko, corporate risk manager at Western Union Business Solutions. Oil prices rose despite doubts that a meeting of producers in Doha next Sunday will improve the demand-supply balance. U.S. crude prices settled at $40.36, up 1.6 percent. Bank of Canada Governor Stephen Poloz is expected to talk up economic risks and play down signs of stronger growth when the central bank sets interest rates on Wednesday, anxious to keep a recovering currency from choking off exports. The implied probability of a Bank of Canada interest rate cut this year has dropped to 14 percent from more than 50 percent at the start of March. The Canadian dollar closed at C$1.2899 to the greenback, or 77.53 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 it touched its strongest level since March 31 at C$1.2885. It approached key resistance levels at C$1.2832, its strongest level since the Bank of Canada last cut interest rates in July, at C$1.2800. Penetration of C$1.2800 would force longer-term players to act, triggering additional buying of Canadian dollars, according to Goshko. Speculators have turned bullish on the Canadian dollar for the first time since May last year, Commodity Futures Trading Commission data showed on Friday. Canadian government bond prices were mixed across the maturity curve, with the two-year price up 2 Canadian cents to yield 0.557 percent and the benchmark 10-year falling 10 Canadian cents to yield 1.239 percent. The Canada-U.S. 10-year spread moved 1.1 basis points higher to -48.3 basis points, its least negative level since May last year as Canadian government bonds underperformed. (Reporting by Fergal Smith; Editing by Nick Zieminski and Leslie Adler)
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