CANADA FX DEBT-C$ touches 6-month high with momentum intact
* Canadian dollar at C$1.0649 or 93.91 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, July 2 (Reuters) - The Canadian dollar was higher against the greenback on Wednesday and had touched a six-month high in early trading that was undercut by data that showed surprisingly strong hiring by companies south of the border.
The loonie has been on an upward climb since early June, gaining 2.6 percent, a rise that has been fueled in part by higher than expected inflation in Canada and its implications for central bank policy.
Since that inflation report nearly two weeks ago, the Canadian dollar has had momentum on its side as it has broken through key technical levels.
"We have a combination of things that have worked in the Canadian dollar's favor, and in the near term it's a difficult trend to fight," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.
"However, it's also difficult to expect that this will sustain itself at these levels because I think it does begin to pose broader questions for both the Bank of Canada and the general economic backdrop." The Canadian dollar was at C$1.0649 to the greenback, or 93.91 U.S. cents, stronger than Monday's official Bank of Canada close of C$1.0670, or 93.72 U.S. cents. Financial markets in Canada were closed on Tuesday for the Canada Day holiday.
The loonie touched a high of C$1.0627 in early morning trading, its highest level since early January, before the robust U.S. jobs data cut the gain.
U.S. companies hired 281,000 workers in June, marking the biggest monthly increase since November 2012. The U.S. dollar rose 0.2 percent against a basket of currencies, to the detriment of the loonie.
Whether the Canadian dollar can break through C$1.06 will be the next level traders will be watching, but any move into the C$1.05s and beyond is likely to be temporary, Sutton said.
By the time the Bank of Canada's next policy meeting comes up on July 16, "we'll likely be off the highs in the Canadian dollar," she said.
Canadian government bond prices were lower across the maturity curve, with the two-year off 5 Canadian cents to yield 1.127 percent and the benchmark 10-year down 45 Canadian cents to yield 2.287 percent.
(Editing by Peter Galloway)
