CANADA FX DEBT-C$ stronger as crude climbs, Fed shows optimism

(Updates with market commentary, closing figures; updated
details on the Fed, oil market)
    * Canadian dollar at C$1.2196, or 81.99 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, May 20 (Reuters) - The Canadian dollar strengthened
against all of its key counterparts on Wednesday, including the
U.S. dollar, as crude prices recouped some recent losses, and
minutes from the Federal Reserve's April meeting showed the
central bank was still optimistic about the economy.
    Fed officials thought a June rate increase would be
premature, but most believed the U.S. economy would gather steam
after a lackluster first quarter. The United States is Canada's
largest trading partner. 
    "If you read between the lines, (the Fed's) still pretty
optimistic," said Adam Button, currency analyst at ForexLive in
    However, he added that economic data will ultimately dictate
moves for traders.
    The Canadian dollar, which lost a combined 1.8
percent on Monday and Tuesday, finished at C$1.2196 to the
greenback, or 81.99 U.S. cents. This was stronger than the Bank
of Canada's official close of C$1.2232, or 81.75 U.S. cents on
    The currency traded between C$1.2170 and C$1.2257 during the
    "The market today is trying to find some stability after two
wonky days to start the week," said Button, noting the thin
trading on Monday, the Victoria Day holiday in Canada.
    "The Canadian dollar was smashed so hard on Monday that
traders in Toronto have been playing catch up ever since ... It
really points to the move on Monday as way overdone."
    The price of crude, a key Canadian export, remained a major
driver for the Canadian dollar. Prices rose on data that showed
U.S. crude stocks fell much more than forecast, snapping a
five-day decline by U.S. oil. 
    U.S. crude prices were up 1.28 percent at $58.73,
while Brent crude rose 1.23 percent to $64.81.
    The loonie also made modest inroads during the session after
data showed Canadian wholesale trade rose 0.8 percent in March
from February to C$53.94 billion following two consecutive
monthly declines. Analysts had expected a 0.9 percent increase.
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 3 Canadian
cents to yield 0.681 percent and the benchmark 10-year
 rising 29 Canadian cents to yield 1.798 percent.
    The Canada-U.S. two-year bond spread was 8.80 basis points,
while the 10-year spread was -46.2 basis points.

 (Reporting by Solarina Ho; Editing by Lisa Von Ahn and Andre