* C$ rallies as high as 86.66 U.S. cents
* Move triggered by strong trade data
* Bond prices down across the curve
By Frank Pingue
TORONTO, May 12 (Reuters) - Canada's currency got a sudden boost versus the U.S. dollar on Tuesday morning after domestic data showed the trade surplus in March more than doubled what the market had been expecting.
The Canadian dollar rallied as high as C$1.1540 to the U.S. dollar, or 86.66 U.S. cents, moments after the data, which put if comfortably above C$1.1658 to the U.S. dollar, or 85.78 U.S. cents, at Monday's close.
The boost in the currency followed a report that showed the trade surplus in March rose to C$1.11 billion, due largely to lower energy imports. [ID:nN11501985]
But by 8:55 a.m. (1255 GMT), the Canadian dollar retreated slightly to C$1.1577 to the U.S. dollar, or 86.38 U.S. cents, and was unable to crack through the six-month high it hit during Monday's North American session.
"Definitely good results for the trade, not outrageously good ... data is not having as material an impact as it had in the past but certainly a little bit positive," said Steve Butler, director of foreign exchange trading at Scotia Capital.
Butler said he feels the Canadian dollar has some catching up to do when compared to other commodity-linked currencies like the Australian and New Zealand dollars.
Domestic bond prices were lower across the curve, relinquishing gains made during the previous session, as the data left investors with less interest in more secure assets like government debt. (Editing by Jeffrey Hodgson)
