CANADA FX DEBT-C$ strengthens to nearly 10-month high as oil rallies
* Canadian dollar at C$1.2549 or 79.69 U.S. cents * Bond prices higher across the maturity curve By Ethan Lou TORONTO, April 28 (Reuters) - The Canadian dollar hit nearly a 10-month high on Thursday against its U.S. counterpart as oil rallied and weaker-than-expected American economic growth weighed on the greenback. Oil markets rose to new 2016 highs, with U.S. crude settling at $46.03 per barrel, up 70 cents, as a weaker U.S. dollar had investors shrugging off record high U.S. crude inventories and relentless pumping by major producers. "Canada is once again proving to be more stable and more strong than markets had anticipated." said Adam Button, currency analyst at ForexLive in Montreal The loonie's rise against its American counterpart comes as the U.S. dollar suffered a deep daily loss against the yen, after a lack of fresh stimulus from the Bank of Japan sent the yen soaring and world equity markets into the red. U.S. gross domestic product increased at a 0.5 percent annual rate, the weakest since the first quarter of 2014, the Labor Department said in its advance estimate. The Canadian dollar has rallied more than 17 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 is a major Canadian export. The Canadian dollar ended at C$1.2549 to the greenback, or 79.69 U.S. cents, stronger than Wednesday's close of C$1.2619, or 79.25 U.S. cents. The currency's weakest level was C$1.2606, while it touched its strongest since July 1 last year at C$1.2515. Canadian government bond prices were higher across the maturity curve, with the two-year price up 1 Canadian cent to yield 0.674 percent and the benchmark 10-year rising 20 Canadian cents to yield 1.479 percent. The Canada-U.S. two-year bond spread was 4.8 basis points less negative at -11.6 basis points, its narrowest gap since Nov. 23 last year, as Treasuries outperformed. (Reporting by Ethan Lou in Toronto; Editing by Toni Reinhold)
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