* Firmer oil prices help spark currency’s move
* High equity backdrop also plays a role
* Bond prices flat as U.S. bank earnings eyed
By Frank Pingue
TORONTO, April 14 (Reuters) - The Canadian dollar rose to its highest level in over two months versus the U.S. currency on Tuesday, helped by a combination of firmer oil prices and a rally in overseas equity markets.
The rise in the domestic currency, while backed mostly by a solid fundamental background, got a sudden boost as it pierced a key technical level around C$1.2180.
With the move higher, the Canadian dollar managed to move further away from the multi-year low it hit in early March when falling equities sent investors flocking to the greenback given its perceived safe haven status.
“Most base metals are higher. Gold is gold higher, oil is higher and so all of that is playing into the Canadian dollar’s favor.” said Matthew Strauss, senior currency strategist at RBC Capital Markets.
“So we have a good fundamental backdrop and there was this looming support level, and once it was successfully tested it rallied.”
The Canadian currency rose as high as C$1.2127 to the U.S. dollar, or 82.46 U.S. cents, which marked its highest level since Feb. 9.
By 7:55 a.m. (1155 GMT), the domestic currency retreated slightly to C$1.2138 to the U.S. dollar, or 82.39 U.S. cents, but remained up from C$1.2193 to the U.S. dollar, or 82.01 U.S. cents, at Monday’s close.
With no key domestic data due out on Tuesday, the currency’s moves will likely be dictated by the performance of equities and moves in the U.S. dollar.
The next Canadian data that may draw attention is Thursday’s February manufacturing sales report and the consumer price index data for March due out on Friday.
The CPI report will be the last major piece of data for the Bank of Canada to consider ahead of its key interest rate announcement on April 21.
The central bank cut its key rate to a historic low of 0.5 percent in March and has signaled it may take extra steps to pump money into a system that remains short of credit.
BONDS PRICES TILT HIGHER
Canadian bond prices were a touch higher across the curve, mirroring a move by the bigger U.S. Treasury market, as some upbeat U.S. banking news left dealers with little interest in more secure assets like government debt.
After the markets closed on Monday, Goldman Sachs (GS.N) delivered a higher-than-expected first-quarter profit, seen by some experts as evidence it managed to sidestep the worst of the financial crisis. [ID:nN13387020]
The two-year bond was up 1 Canadian cent at C$100.31 to yield 1.102 percent, while the 10-year bond rose 12 Canadian cents to C$107.17 to yield 2.925 percent.
The 30-year bond was up 10 Canadian cents at C$123.75 to yield 3.643 percent. In the United States, the 30-year treasury yielded 3.705 percent.
(Editing by Chizu Nomiyama)