TORONTO, Nov 10 (Reuters) - The Canadian dollar strengthened to a 10-day high against its U.S. counterpart on Monday as risk appetite improved and last week's federal budget and stronger-than-expected jobs data increased the currency's appeal for some investors.
The loonie was trading 0.1% higher at 1.4030 per U.S. dollar, or 71.28 U.S. cents, after touching its strongest intraday level since October 31 at 1.4002.
"We think the mix of growth-boosting measures and efficiency savings in the Canadian federal budget is constructive for the currency, and while last Friday's jobs data helped push back on BoC easing expectations, markets have further to go to align with our call for no further policy easing," said Nick Rees, head of macro research at Monex Europe Ltd.
Canada's economy generated far more jobs than expected for a second straight month in October and the unemployment rate declined, data on Friday showed.
Last Tuesday, Prime Minister Mark Carney committed to invest about C$280 billion over five years in infrastructure as well as on measures to raise productivity and competitiveness in his maiden budget proposal.
Investors expect the Bank of Canada to leave policy on hold next month after it lowered the benchmark interest rate in October to a three-year low of 2.25%. About 11 basis points of easing is priced into the market by June next year.
"Combined with today's risk-on tone stemming from the prospect of the U.S. government re-opening, it is a little curious to us that the loonie has not made greater gains, though we think it will do over the coming days," Rees said.
Wall Street's main indexes rose following signs of progress in Washington to end a record government shutdown that has stalled economic data releases and intensified concerns over the state of the economy.
Canadian government bond yields were mixed across the curve. The 10-year was down 1 basis point at 3.175%, after touching an earlier one-month high at 3.210%.
Reporting by Fergal Smith; Editing by Richard Chang
