CANADA FX DEBT-C$ rallies as greenback falters, oil rises
* Canadian dollar at C$1.3001 or 76.92 U.S. cents * Bond prices mostly lower across the maturity curve By Solarina Ho TORONTO, Aug 10 (Reuters) - The Canadian dollar logged its biggest one-day gain against the greenback since early June on Monday, reversing early losses as the price of crude oil, a major Canadian export, rallied and the U.S. dollar slumped against a basket of key currencies. Optimism that China, one of the world's biggest resource consumers, will take action to stimulate its economy following another round of disappointing data bolstered global market sentiment, helping the loonie. Its jump took some of the sting out of recent losses that had pulled the Canadian dollar to its weakest levels since 2004. The currency retreated on Friday after strong U.S. and weak Canadian labor reports for July did nothing to alter the two countries' divergent monetary policy paths. "A little bit of U.S. dollar weakness, a little bit of oil strength, a bit of China optimism ... those are the usual suspects whenever you see a Canadian dollar move," said Adam Button, currency analyst at ForexLive in Montreal. The Canadian dollar ended the session at C$1.3001 to the greenback, or 76.92 U.S. cents, more than 1 percent firmer than the Bank of Canada's close at C$1.3133, or 76.14 U.S. cents on Friday. At one point, the currency touched C$1.2991, or 76.98 U.S. cents, its strongest level since the end of July. The greenback fell against the euro and other major currencies as optimism about the global economy pushed traders with longstanding bullish bets on the U.S. dollar to pare their positions. The weakness also came as markets, reacting to comments by Federal Reserve officials on Monday, were less certain about the central bank's longer-term rate hike intentions, Button said. "How many more times will the Fed hike is the big question," he said. Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 5 Canadian cents to yield 0.464 percent and the benchmark 10-year falling 51 Canadian cents to yield 1.474 percent. The Canada-U.S. two-year bond spread narrowed to -26.5 basis points, while the 10-year spread widened to -75.7 basis points. (Reporting by Solarina Ho Editing by W Simon and Peter Galloway)
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