CANADA FX DEBT-C$ touches nearly 2-week high as Brexit odds fall
* Canadian dollar at $1.2772, or 78.30 U.S. cents * Loonie touches its strongest since June 10 at C$1.2680 * Bond prices lower across steeper maturity curve (Adds details, quotes; updates prices) TORONTO/OTTAWA, June 23 (Reuters) - The Canadian dollar strengthened to a nearly two-week high against its U.S. counterpart on Thursday as increased chances that Britain will remain in the European Union and higher oil prices supported the risk-sensitive, commodity-linked currency. A series of late opinion polls favored Britons voting in Thursday's referendum to stay in the European Union, and bookmakers' odds indicated a further shift toward the "Remain" camp. Nonetheless, the bulk of recent polls have suggested the result was too close to call and markets remained wary. The loonie rallied more than 1 percent to a session high of C$1.2680, its highest level in nearly two weeks, before giving back about half of its gains. The loonie would weaken and the chances that the Canadian central bank cuts interest rates would jump if Britain votes to leave the European Union, strategists warn, noting the result could hit global growth and spell bad news for commodity-exporting countries. A gain in oil prices helped support the Canadian dollar on Thursday, but oil was likely to be a secondary factor as the results of the referendum start to come in, said Rahim Madhavji, president at KnightsbridgeFX.com. "The biggest swing in the next 24 hours is going to be Brexit, one way or the other," Madhavji said. "We'll either see the loonie rally maybe about a percent or so if it's a stay scenario, and all hell could break loose if it's an exit." The Canadian dollar ended the North American trading session at C$1.2772 to the greenback, or 78.30 U.S. cents, stronger than Wednesday's close of C$1.2839, or 77.89 U.S. cents. Gains for the loonie came after domestic data on Wednesday showed retail sales rebounded in April to reach a record C$44.28 billion. Still, the Bank of Canada has said the economy may contract in the second quarter after a solid start to the year as a huge wildfire in Alberta weighs on oil production. Canadian government bond prices were lower across the maturity curve, in sympathy with U.S. Treasuries, as increased risk appetite reduced investor demand for safe-haven assets. The two-year price fell 5.5 Canadian cents to yield 0.627 percent, and the benchmark 10-year dropped 65 Canadian cents to yield 1.301 percent. The 10-year yield touched its highest level since June 1 at 1.319 percent. (Reporting by Fergal Smith in Toronto and Leah Schnurr in Ottawa; Editing by Leslie Adler)
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