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
    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)