CANADA FX DEBT-C$ notches 11-day high as oil climbs, economic fears ease

 (Adds strategist quotes and details on activity; updates
    * Canadian dollar RISES 0.3 percent against the greenback
    * Loonie touches its strongest since March 21 at 1.3297
    * Price of U.S. oil rises 2.4 percent
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, April 1 (Reuters) - The Canadian dollar
strengthened to a nearly two-week high against the greenback on
Monday as oil prices rose and Bank of Canada Governor Stephen
Poloz said there are clear signs that Canada is adjusting to
global trade uncertainties.
    Poloz said that the economic outlook continues to warrant an
interest rate below the neutral range, which the central bank
estimates at between 2.50 percent and 3.50 percent, but noted
that recent data suggest that the period of slow growth will be
    Data on Friday showed that gross domestic product climbed by
0.3 percent in January from December, which was much stronger
than economists expected.             
    "It looks like Friday's GDP data is mostly what's driving
the price action," said Ranko Berich, head of market analysis at
Monex Canada and Monex Europe. "Any sort of hyperventilation
about the Canadian economy really slowing to the point of where
it was a contraction or the Bank of Canada would need to ease,
any narratives like that are overplayed."
    Chances of an interest rate cut this year have fallen to
about 30 percent from nearly 70 percent before Friday's GDP
    While data on Monday showed that Canada's manufacturing
sector expanded in March at the slowest pace in two and a half
years, upbeat Chinese and U.S. manufacturing data helped boost
the price of price of oil, one of Canada's major exports.
     U.S. crude oil futures settled 2.4 percent higher at $61.59
a barrel.
    At 4:04 p.m. (2004 GMT), the Canadian dollar          was
trading 0.3 percent higher at 1.3313 to the greenback, or 75.11
U.S. cents. The currency touched its strongest intraday level
since March 21 at 1.3297.
    The gain for the loonie follows a 2.2 percent advance in the
first quarter, which was the best performance in the G10.
    It was a positive start to a month in which the currency has
had a winning streak. The currency has gained in April in 11 of
the last 13 years, a sequence strategists link to seasonal
vitality in stocks and energy products.             
    On Friday, data from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed that speculators have
cut their bearish bets on the Canadian dollar.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The 10-year
            was down 74 Canadian cents to yield 1.703 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Grant McCool)