* C$ touches C$1.0486 to U.S. dollar, or 95.37 U.S. cents
* Supported by rallying stocks, oil price
* Bonds fall across curve (Adds details, quotes)
TORONTO, July 6 (Reuters) - The Canadian dollar touched a session high against its U.S. counterpart on Tuesday after data showed the U.S. services sector was still growing, adding to a broad rally that boosted equity and commodity prices.
The Canadian dollar touched a session high of
C$1.0486 to the U.S. dollar, or 95.37 U.S. cents, shortly after
data showed the U.S. non-manufacturing sector grew in June for
a sixth straight month, even though the rate of growth slowed
more than expected. [ID:nN06274234]The data bolstered an already high-flying currency, which had drawn support from an upbeat assessment of the global economy by the Reserve Bank of Australia, as well as receding sovereign debt fears in Europe. [FRX/]
Canada's commodity-linked dollar was also boosted by oil prices rebounding toward $74 a barrel, as well as a rally in global and North American equity markets. [O/R] [MET/L] [.N]
"You're seeing a bit of a rebound in equities this morning and you're seeing an associated rebound in commodity prices," said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
Askari said the Canadian dollar climbed after being oversold in recent sessions.
"When it couldn't break through the C$1.0680 area you saw some people caught short the Canadian dollar. The fast money turned themselves around and now they're running to catch up," he said.
At 11:07 a.m. (1507 GMT), the Canadian dollar was
at C$1.0506 to the U.S. dollar, or 95.18 U.S. cents, up sharply
from Monday's finish at C$1.0650 to the U.S. dollar, or 93.90
U.S. cents.Askari said that as the Canadian currency rebounds, a key technical level to watch for will be C$1.0472 to the U.S. dollar. If the unit is able to pierce that level then the 200-day moving average of C$1.0423 is the next target.
On the data front, investors will be closely watching Friday's jobs data for further clues on whether the Bank of Canada will raise rates on July 20.
"You've got a slightly higher percent chance of the bank moving on July 20 being priced in," said Askari.
Yields on overnight index swaps, which trade based on
expectations for the Bank of Canada's key policy rate, showed
the market sees a 60 percent chance of a July rate hike,
compared with around 55 percent on Monday. BONDS FALTER
Canadian government bonds fell across the curve as investors flocked to riskier assets such as equities.
The two-year government bond sank 8 Canadian cents to yield 1.451 percent, while the 10-year bond shed 35 Canadian cents to yield 3.121 percent. (Reporting by Jennifer Kwan; editing by Rob Wilson)
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