CANADA FX DEBT-C$ strengthens after trade data, higher crude

* Canadian dollar at C$1.2048 or 83.00 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, May 5 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday, supported by stronger
crude prices and following data that showed a jump in Canada and
the United States' trade deficits.
    A record trade deficit of C$3.02 billion ($2.50 billion) in
March initially sent the loonie into sharp retreat, but the
currency quickly recouped losses, strengthening to a session
    Investors also digested U.S. trade numbers, which showed the
deficit surged to its highest level in nearly 6-1/2 years.
    "On the Canadian number ... real balance deteriorated a
little bit, not quite as bad as the headline suggests," said
Benjamin Reitzes, senior economist at BMO Capital Markets.
    "On the U.S. side, a huge increase in real imports. Real
exports were just modestly higher, and that suggests we'll get a
downward revision to Q1 for U.S. GDP growth."
    At 9:31 a.m. EDT (1331 GMT), the Canadian dollar,
which was outperforming nearly all of its major counterparts,
was trading at C$1.2053 to the greenback, or 82.97 U.S. cents,
stronger than the Bank of Canada's official close of C$1.2092,
or 82.70 U.S. cents.
    The currency has traded between C$1.2048 and C$1.2131 so far
in the session.
    Market participants are also awaiting labor market data due
on Friday, the first major economic figures for the second
quarter. Both the Federal Reserve and the Bank of Canada have
expressed optimism that the economic outlook would improve after
the first quarter.
    "There's a number of temporary factors in Q1 and you don't
want to put too much emphasis on it, but you don't want to
ignore it either. I think markets do understand that," said
    In the near term, the Canadian dollar is expected to
continue to find support from higher crude prices, which are
well off the multi-year lows hit earlier this year. 
    Those gains are expected to be limited, however. Combined
with an expected Fed rate hike this year, the loonie is still
forecast to weaken over the medium term.
    U.S. crude prices were up 2.72 percent to $60.53,
while Brent crude added 2.24 percent to $67.94 to 2015
    Canadian government bond prices were mixed across the
maturity curve, but both the two-year price was up 4
Canadian cents to yield 0.692 percent and the benchmark 10-year
 rose 4 Canadian cents to yield 1.711 percent.
    The Canada-U.S. two-year bond spread was 9.7 basis points,
while the 10-year spread was -43.1 basis points.

 (Reporting by Solarina Ho; Editing by Nick Zieminski)