CANADA FX DEBT-C$ rises for 4th straight session

Thu Mar 31, 2011 4:44pm EDT
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   * C$ ends at $1.0314; up 2.6 pct for the quarter
 * Currency earlier touched 3-week high
 * GDP grows 0.5 percent in January as expected
 * Bonds fall across curve
 * Investors eager to see Friday's U.S. March jobs data
 (Updates to close)
 By Ka Yan Ng
 TORONTO, March 31 (Reuters) - The Canadian dollar gained
against the U.S. currency for a fourth straight session on
Thursday, backed by strong oil prices and a report on Canadian
economic growth that was in line with forecasts.
 The U.S. oil price, a prime mover of Canada's currency
because the country is a major exporter of oil, settled at its
highest level in 2-1/2 years on Thursday at $106.72 per barrel.
 Oil's gains also pushed up Toronto's main stock index
.GSPTSE, and risk appetite was firm ahead of Friday's closely
watched monthly employment report from the U.S. Labor
Department. Economists predict 190,000 jobs were added to March
nonfarm payrolls, and the data could have a strong impact on
markets. [ID:nN31253973]
 "We're basically playing the waiting game in advance of
payrolls," said David Tulk, chief Canada macro strategist at TD
 "Equity markets continue to lead the charge higher.
Commodities have also been very well supported, and you're
seeing a general flow into those risky assets."
 The Canadian currency finished at C$0.9696 to the U.S.
dollar, or $1.0314, up from Wednesday's close at C$0.9713 to
the U.S. dollar, or $1.0296. Thursday's close was also shy of
the three-week high of C$0.9683, or $1.0327, hit earlier in the
 For the quarter, the Canadian dollar was up 2.6 percent,
and for the month, up 0.2 percent.
 In economic news, data on Thursday showed the Canadian
economy grew 0.5 percent in the January from December, as
expected, for a solid start to the year. The result will likely
be enough for the Bank of Canada to issue an upgraded economic
outlook in its Monetary Policy Report (MPR) in April, analysts
said. [ID:nN31223177]
 But the report was not seen as strong enough to spur the
central bank to raise interest rates on April 12, its next
policy-setting date.
 "We think they are going to be more optimistic in April. We
do expect them to use that MPR ... to lay the foundations for
the tightening campaign. But in the backdrop we've also had
four straight CPI reports that have below expectations," said
David Watt, senior fixed income and currency strategist, at RBC
Capital Markets.
 "The Bank of Canada's got a difficult situation. But we
think they are more likely to move in May."
 Following the data, traders maintained bets that there is
little chance the central bank will raise rates in April,
according to a Reuters calculation of yields on overnight index
swaps. Odds of a May hike were also seen as low. BOCWATCH
 However, the market slightly increased the probability of a
move at the central bank's July policy announcement date, and
has now fully priced in a hike in September, moved forward from
 Canadian bond prices were mostly lower across the curve,
mirroring U.S. Treasury movements, and taking little notice of
the domestic GDP data. Instead, investors were cautious ahead
of Friday's influential U.S. nonfarm payroll data. [US/]
 The two-year bond CA2YT=RR dipped 8 Canadian cents to
yield 1.816 percent, while the 10-year bond CA10YT=RR lost 45
Canadian cents to yield 3.752 percent.
 (Editing by Peter Galloway)