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TORONTO, June 1 (Reuters) - Canada's currency shot higher versus the U.S. dollar on Monday, boosted by risk appetite, but fell back slightly ahead of domestic data that is expected to show Canada experienced the biggest economic contraction on record in the first quarter.
Data due at 8:30 a.m. (1230 GMT) will likely show GDP shrank 6.6 percent, annualized, in the January to March period, according to a median forecast by analysts in a Reuters poll. [ID:nN28322505] [ID:nN25451156]
The Canadian dollar rallied overnight to hit C$1.0784 to the U.S. dollar, or 92.73 U.S. cents, extending its climb since falling to a four-year low in early March.
At 7:40 a.m., the unit was at C$1.0837 to the U.S. dollar, or 92.28 U.S. cents, up from Friday's session close of C$1.0917 to the U.S. dollar, or 91.60 U.S. cents
"What we're seeing is a very positive start to the week for risky assets," Matthew Strauss, senior currency strategist, RBC Capital Markets. "Two factors behind it are a very strong return to riskier asset classes and broad-based U.S. dollar selling."
Strauss said the Canadian dollar fell back a bit ahead of the Canadian gross domestic product data, but the retreat is more likely due to a pause after a strong rally overnight.
"We had some very aggressive moves overnight and we have some stock taking as North America opens," he said.
World stocks and oil rallied to fresh 2009 highs on Monday after signs of improvement in global factory activity added to optimism the global economy may be on the road to recovery. [MKTS/GLOB] U.S. stock index futures pointed to a higher open. [ID:nN01437106]
The Canadian dollar has steadily climbed above its March low, a move credited to a combination of higher prices for key Canadian commodities, some upbeat economic data and lower demand for the U.S. dollar.
In May, the unit rallied 9.3 percent, its biggest monthly gain since at least October 1950, according to Bank of Canada data that dates back to 1950.
Canadian bond prices were mostly lower across the curve, following U.S. Treasuries, which fell in Europe as gains in equities dented the appeal of government debt. [ID:nL1471444] (Reporting by Jennifer Kwan; Editing by Theodore d'Afflisio)