CANADA FX DEBT-C$ strengthens against broadly weaker greenback
* Canadian dollar at C$1.2536 or 79.77 U.S. cents * Bond prices mixed across the maturity curve (Adds updated prices, quotes, details) TORONTO/OTTAWA, May 2 (Reuters) - The Canadian dollar rose modestly against the greenback on Monday as the benefit from a broadly weaker U.S. dollar was offset by a drop in oil prices, which have been a major driver for the commodity-sensitive loonie. Investors were also consolidating positions after a Canadian dollar rally of 17 percent from a 12-year low in January of C$1.4689, helped by rebounding oil prices, fiscal stimulus and stronger-than-expected domestic economic activity. The loonie also faces technical resistance rising past the C$1.25 level, which it broke through on Friday but could not sustain. After such a strong rally, the Canadian dollar is likely to be rangebound for now around current levels, without major catalysts to push it significantly lower or higher, said Don Mikolich, executive director of foreign exchange sales at CIBC Capital Markets. "A bit of the panic from earlier in the year has disappeared," said Mikolich. "Similarly, it's hard to justify seeing the Canadian dollar a whole lot stronger, given that we are still only at $45 oil and we're not looking to hike rates until perhaps sometime in the second half of next year." The Canadian dollar ended the North American trading session at C$1.2536 to the greenback, or 79.77 U.S. cents, slightly stronger than Friday's close of C$1.2548, or 79.69 U.S. cents. Oil prices tumbled as production in the Middle East neared all-time peaks. U.S. crude ended down $1.14 at $44.78 a barrel. The greenback fell against a basket of major currencies as solid German manufacturing data helped push the euro higher. The domestic economic calendar was light, with the main report showing growth picked up in the Canadian manufacturing sector in April for the second month in a row as businesses increased their production volumes in response to stronger demand. Speculators have increased their bullish bets on the loonie, U.S. Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions rose to 11,999 contracts in the week ended on Tuesday from 7,308 in the prior week. Canadian government bond prices were mixed across the maturity curve, with the two-year price up half a Canadian cent to yield 0.691 percent, while the benchmark 10-year fell 15 Canadian cents to yield 1.530 percent. (Reporting by Fergal Smith and Leah Schnurr; Editing by Peter Cooney)
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