CANADA FX DEBT-C$ strengthens to near a two-month high
* Canadian dollar at C$1.0928 or 91.51 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, April 8 (Reuters) - The Canadian dollar strengthened against the greenback on Tuesday to hit its highest level in nearly two months as investors were reassured by signs of health in recent economic data, increasing risk appetite. Still, the loonie trimmed some gains after a round of disappointing housing data on Tuesday morning. Housing starts in Canada fell more than expected in March, while building permits slumped in February. In Quebec, the federalist Liberal Party won a majority government in provincial elections, eliminating the threat of an impending referendum on independence from Canada. The election result was likely to reassure investors, though the runup to Monday's vote had not had much impact on the currency. Since touching a 4-1/2 year low in late March, the loonie has bounced higher. A robust employment report last week propelled it through the C$1.10 level, which had represented significant resistance. "Setting aside these housing numbers, the broader trend in activity data and inflation data has been slightly better than expected over the past couple months," said Greg Moore, senior currency strategist at Royal Bank of Canada in Toronto. "Looking forward to the Bank of Canada meeting next week, it suggests they're not going to have much evidence to continue emphasizing the downside risk as much, which should be a marginal positive for the Canadian dollar." The Canadian dollar was at C$1.0928 to the greenback, or 91.51 U.S. cents, stronger than Monday's close of C$1.0969, or 91.17 U.S. cents. The loonie rose as high as C$1.0917, its highest level since mid-February. The currency is likely to see further gains heading into the Bank of Canada's policy announcement on April 16 and potentially in the weeks after, Moore said. "In the next couple weeks, we could probably dip down into C$1.08 area," he said. "Broadly speaking, we're looking at the low C$1.09s to C$1.12 sideways trend to continue for the next few months." Canadian government bond prices were lower across the maturity curve, with the two-year off half a Canadian cent to yield 1.085 percent and the benchmark 10-year down 8 Canadian cents to yield 2.472 percent. (Editing by Peter Galloway)
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