CANADA FX DEBT-C$ backs off 9-month high with Fed in no rush to hike
* Canadian dollar at C$1.2619, or 79.25 U.S. cents * Bond prices higher across the maturity curve (Adds Fed details, quote, updates prices) TORONTO/OTTAWA, April 27 (Reuters) - The Canadian dollar touched a nine-month high against the greenback on Wednesday as oil jumped, but signals from the U.S. central bank that it was in no rush to raise interest rates ultimately left the currency little changed. The loonie has rallied more than 16 percent from a 12-year low in January of C$1.4689, helped by better-than-expected domestic economic activity, fiscal stimulus and rebounding oil prices. Oil prices on Wednesday reached their highest level of 2016, with U.S. crude prices settling up $1.29 at $45.33 a barrel. The gains in oil helped the Canadian currency touch a session high of C$1.2571 in the morning but it lost steam later in the session as the Fed left the door open to an interest rate hike in June, even as it implied it was in no hurry. "It lays a little bit of the groundwork for a rate hike but again it's just kicking the can forward," said Rahim Madhavji, president of KnightsbridgeFX.com. "The Fed showed (what) they're leaning toward and they're moving in that direction, but they didn't really show their cards." The Canadian dollar ended the North American trading session at C$1.2619 to the greenback, or 79.25 U.S. cents, a tad stronger than Tuesday's close of C$1.2621, or 79.23 U.S. cents. As investors are trying to gauge when the next Fed hike will come, the Bank of Canada is expected to stay on the sidelines for some time after cutting rates twice last year. A shift in expectations for the direction of Canadian interest rates has added to recent support for the loonie. The market has swung from implying at the start of March a more than 50 percent chance of a rate cut this year to implying modest risk of a hike, overnight index swaps (OIS) showed. Canadian government bond prices were higher across the maturity curve, with the two-year price up 4 Canadian cents to yield 0.677 percent and the benchmark 10-year rising 43 Canadian cents to yield 1.505 percent. The 10-year yield on Tuesday reached its highest since Dec. 7 at 1.577 percent. (Reporting by Leah Schnurr and Fergal Smith; Editing by James Dalgleish)
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