CANADA FX DEBT-C$ zips above 99 cents, bonds edge higher
* C$ rises to two-week high of 99.09 U.S. cents
* Bonds tick higher, focus on Friday's U.S. jobs report (Updates throughout)
By Ka Yan Ng
TORONTO, April 1 (Reuters) - Canada's dollar popped above the 99 U.S. cent level for the first time in almost two weeks on Thursday, extending gains against the U.S. dollar as the price of oil hit an 18-month high and other riskier assets found favor.
At 1:55 p.m. (1755 GMT), the Canadian dollar was at its highest point since March 19, rising to C$1.0092 to the U.S. dollar, or 99.09 U.S. cents, up from Wednesday's finish at C$1.0158 to the U.S. dollar, or 98.44 U.S. cents.
"The primary credit goes to the risk-on trade that's prevailing in most markets. The Canadian dollar is enjoying the updraft," said Eric Lascelles, chief economics and rates strategist at TD Securities.
Oil neared $85 a barrel, drawing fresh inflows from investors at the start of the new quarter, while global stocks moved higher, backed partly by upbeat European and Chinese manufacturing data that fueled optimism about the global economic recovery. [O/R] [MKTS/GLOB]
Data south of the border added to hopes for economic recovery in the United States as jobless claims fell in the latest week and U.S. factory activity in March hit its highest level in more than 5-1/2 years. [ID:nN01114317]
Taking its cue from the rise in oil, a major Canadian export, the Canadian dollar reached its highest level since March 19, At that time it was at its highest point since July 2008 and looked primed to test parity with the greenback.
Liquidity looked set to wane late in the day on Thursday ahead of the U.S. nonfarm payrolls report for March on Friday, when Canada will be closed for the Good Friday holiday.
"The Canadian dollar is still in its well-defined uptrend, but vulnerable to position-squaring ahead of the long Easter weekend," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange, a commercial foreign exchange dealing firm.
The Canadian dollar has begun the second quarter on a strong note, having notched a bit more than a 3 percent gain against the greenback in the first three months of the year.
BONDS OUTPERFORM U.S., EYE JOBS DATA
Canadian bond prices were flat to higher across the curve, outperforming U.S. Treasuries, as market players waited for Friday's U.S. jobs report and largely looked past Thursday's stronger than expected U.S. data.
"It's important to emphasize how small the movement is. It does not necessarily represent a groundswell of attitude change among investors," Lascelles said.
"This might be some rejigging more than anything else in advance of the weekend and (U.S.) payrolls."
There may also be more trepidation around the U.S. jobs data than usual, in part because most markets will be shut for Easter.
The two-year government bond CA2YT=RR edged up 3 Canadian cents to C$99.59 to yield 1.722 percent, while the 10-year bond CA10YT=RR gained 10 Canadian cents to C$101.50 to yield 3.557 percent.
Canadian bond prices have generally been on the decline as market players increasingly price in the probability that the Bank of Canada will hike interest rates in July. (Reporting by Ka Yan Ng; editing by Peter Galloway)
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