CANADA FX DEBT-C$ strongest since January as dovish Fed hurts greenback
* Canadian dollar at C$1.0821 or 92.41 U.S. cents * Bond prices rise across the maturity curve By Alastair Sharp TORONTO, June 19 (Reuters) - The Canadian dollar reached its strongest level against its U.S. counterpart since early January on Thursday as investors shied away from the greenback following a dovish tilt in U.S. Federal Reserve statements the day before. The Fed expressed confidence on Wednesday that U.S. economic recovery is on track, but it also lowered its projections for the long-run target interest rate, evidence of slightly diminished expectations for a nation still climbing out of a severe crisis. "The Canadian dollar is being pulled along on general (U.S.) dollar weakness after the FOMC (Federal Open Market Committee) and the Fed disappointed the market yesterday," said Dean Popplewell, chief currency strategist at OANDA. He said investors had expected a more hawkish tone from the U.S. central bank's policy-setting committee. By midmorning, the Canadian dollar was at C$1.0821 to the greenback, or 92.41 U.S. cents, stronger than Wednesday's close of C$1.0850, or 92.17 U.S. cents. Popplewell said the Canadian dollar would likely struggle to push through C$1.08 given latent U.S. dollar buying interest. The number of Americans filing new claims for unemployment benefits dropped more than expected last week, pointing to strengthening labor-market conditions in Canada's largest export market. Separately, Canadian data showed an lower ratio of household debt to income in the first quarter, a trend that will likely ease worries at Canada's central bank and finance ministry about an overstretched housing market. Canadian government bond prices were higher across the maturity curve, with the two-year up 5 Canadian cents to yield 1.079 percent and the benchmark 10-year up 46 Canadian cents to yield 2.213 percent. (Editing by Peter Galloway)
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