CANADA FX DEBT-C$ strengthens to a 12-day high as oil rallies
* Canadian dollar at C$1.3005, or 76.89 U.S. cents * Bond prices lower across the maturity curve TORONTO, March 30 (Reuters) - The Canadian dollar strengthened to a 12-day high against its U.S. counterpart on Wednesday as crude oil prices rose and investors rowed back expectations for U.S. interest rate hikes. The U.S. dollar weakened against a basket of major currencies after Federal Reserve Chair Janet Yellen said on Tuesday the U.S. central bank should proceed "cautiously" with rate hikes. Oil prices rose as a weaker U.S. dollar spurred interest in riskier assets and the International Energy Agency said expectations for a deluge of oil from Iran were misplaced. U.S. crude prices were up 2.19 percent to $39.12 a barrel. At 9:23 a.m. EDT (1323 GMT), the Canadian dollar was trading at C$1.3005 to the greenback, or 76.89 U.S. cents, stronger than Tuesday's close of C$1.3065, or 76.54 U.S. cents. The currency's weakest level was C$1.3079, while it touched its strongest since March 18 at C$1.2987. Canadian Finance Minister Bill Morneau, who last week unveiled a deficit-laden budget designed to help boost the sluggish economy, will speak to reporters at 11:45 a.m. EDT (1545 GMT) before making a speech at in New York. On Sunday, Morneau said the government believes the federal budget will be balanced in "about" five years, due to higher growth spurred by deficit spending. Bank of Canada deputy governor Lynn Patterson will speak in Alberta on the fall in commodity prices. Investors will be watching for clues about whether the recent oil price recovery and federal budget have made the central bank less inclined to cut rates further. Patterson's remarks will be published at 2:20 p.m. EDT (1620 GMT). Canadian government bond prices were lower across the maturity curve in sympathy with U.S. Treasuries. The two-year price fell 3 Canadian cents to yield 0.528 percent and the benchmark 10-year was down 35 Canadian cents to yield 1.217 percent. On Tuesday, the 10-year yield hit a three-week low at 1.177 percent. January gross domestic product data is awaited on Thursday. Analysts expect 0.3 percent growth for the month, which would reinforce expectations that first-quarter growth will exceed the Bank of Canada's forecast of 1 percent. (Reporting by Fergal Smith; Editing by Nick Zieminski)
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