CANADA FX DEBT-C$ firms to highest level in over two weeks

In This Article:

* Canadian dollar at C$1.0843 or 92.23 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, May 27 (Reuters) - The Canadian dollar firmed against the greenback on Tuesday to its highest level in over two weeks, though it was not expected to stray from its trading range as investors await key economic reports at the end of the week.

With no major domestic data on the calendar, investors took in reports south of the border, including figures that showed orders for long-lasting U.S. manufactured goods unexpectedly rose last month. The loonie edged higher following the data.

At home, markets will get a report on the current account on Thursday and first-quarter economic growth on Friday, while focus is also turning to the Bank of Canada's policy statement next week. Investors will be watching to see if the central bank's tone turns less dovish following last week's pick up in the inflation rate.

"You've had a modest strengthening bias for Canada, there's a bit of a hangover effect from the firmer CPI," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada in Toronto.

The Canadian dollar was at C$1.0843 to the greenback, or 92.23 U.S. cents, stronger than Monday's close of C$1.0860, or 92.08 U.S. cents.

The loonie touched a high of C$1.0836 in early morning trading, its highest level since early May.

Still, the currency was in the range it has been in in recent weeks as investors weigh generally improving domestic economic data against a central bank that has kept its policy neutral.

"Gradually people are dispelling themselves of this notion that the U.S. is doing great and Canada is really failing, and it's more a question of the U.S. seems to be doing quite well and Canada is doing quite well, just maybe not as strong," Chandler said.

Canadian government bond prices were higher across the maturity curve, with the two-year up half a Canadian cent to yield 1.055 percent and the benchmark 10-year up 17 Canadian cents to yield 2.305 percent.

(Editing by Chizu Nomiyama)