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CANADA FX DEBT-Canadian dollar notches 2-week high as China restrictions ease

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* Canadian dollar strengthens 0.8% against greenback * Loonie touches strongest level since May 5 at 1.2784 * Canadian producer prices rise 0.8% in April * 10-year yield hits three-week low at 2.830% TORONTO, May 19 (Reuters) - The Canadian dollar strengthened to its highest level in two weeks against its U.S. counterpart on Thursday as China eased restrictions to contain the spread of the coronavirus and the greenback broadly fell. The loonie was trading 0.8% higher at 1.2790 to the greenback, or 78.19 U.S. cents, after touching its strongest level since May 5 at 1.2784. On Wednesday, the currency fell 0.6% as Wall Street tumbled. More Shanghai residents were given the freedom to shop for groceries for the first time in nearly two months as authorities set out more plans for exiting the city-wide COVID-19 lockdown more fully. Investors have worried that lockdowns in China would slow global economic growth. Canada is a major producer of commodities, including oil, so the loonie is sensitive to the outlook for the global economy. U.S. crude prices were down 1.1% at $108.34 a barrel as concerns that high fuel prices could hurt economic growth offset the planned easing of restrictions in Shanghai. The safe-haven U.S. dollar fell against a basket of major currencies as the prospect of an aggressive near-term tightening path by the European Central Bank boosted the euro . Meanwhile, data from Statistics Canada showed that Canadian producer prices rose by 0.8% in April from March on higher prices for energy and petroleum products. The annual rate of increase was 16.4%. On Wednesday, data showed that consumer prices climbed 6.8% on a year-over-year basis in April, supporting expectations for a second straight half-percentage-point interest rate hike by the Bank of Canada at its next policy decision on June 1. Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 10-year touched its lowest since April 28 at 2.830% before recovering to 2.862%, down 8.5 basis points on the day. (Reporting by Fergal Smith Editing by Paul Simao)

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