CANADA FX DEBT-C$ strengthens in commodity-linked rally

* Canadian dollar at C$1.2262, or 81.55 U.S. cents
    * Bond prices lower across the maturity curve

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    TORONTO/OTTAWA, June 10 (Reuters) - The Canadian dollar
strengthened to a nearly three-week high against the greenback
on Wednesday, boosted by a rise on oil prices as volatility in
currency markets favored the commodity-linked loonie.
    The Canadian currency also benefited from broad pressure on
the U.S. dollar as the Japanese yen soared after the country's
central bank chief called it "very weak." 
    Oil prices rose for a second day in a row after data showed
a big drawdown in domestic crude stockpiles and U.S. crude
 settled up $1.29 at $61.43 a barrel. As oil is a major
export for Canada, the currency often moves in tandem with oil
    "It's creating an environment whereby currencies, most
noticeably commodity-bloc currencies, are gaining quite
substantially," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.
    The Canadian dollar ended the North American
session at C$1.2262 to the greenback, or 81.55 U.S. cents,
stronger than Tuesday's close of C$1.2346, or 81.00 U.S. cents.
    It was the fourth session in a row that the loonie has
strengthened and the day's gain pushed it toward some key
technical levels.
    After touching a high of C$1.2202, the Canadian dollar
retreated with strong support for the U.S. dollar-Canadian
dollar pairing around those levels, said Scott Smith, senior
market analyst at Cambridge Global Payments in Calgary.
    If Thursday's U.S. retail sales data comes in softer than
expected, that could see the Canadian dollar break past the
C$1.22 level, Smith said.
    At home, investors will also be taking in domestic data on
first-quarter capacity utilization and the new home price index
for April. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3-1/2 Canadian
cents to yield 0.683 percent and the benchmark 10-year
 down 20 Canadian cents to yield 1.902 percent.

 (Reporting by Leah Schnurr in Ottawa and Alastair Sharp in
Toronto; Editing by James Dalgleish)