* Canada promises tough measures to cut deficits
* C$ closes at 97.03 U.S. cents, dips after budget
* Bonds little changed (Adds details)
By Ka Yan Ng
TORONTO, March 4 (Reuters) - The Canadian dollar closed stronger against the U.S. dollar but ebbed from its session high after the federal government presented plans to eliminate the deficit once economic recovery is entrenched.
Closing the stimulus tap and cutting spending sharply after the economy recovers will rein in Canada's record budget deficit, the government said on Thursday. [ID:nCFB000108]
But with some of the details leaked ahead of the publication, there was a muted reaction from government bonds and the Canadian dollar.
"The market is not in the least surprised," Eric Lascelles, chief economics and rates strategist at TD Securities.
The Canadian dollar closed higher for a fifth straight session at C$1.0306 to the U.S. dollar, or 97.03 U.S. cents, compared with C$1.0320 to the U.S. dollar, or 96.90 U.S. cents, at Wednesday's close.
It slipped to C$1.0315 to the U.S. dollar, or 96.95 U.S. cents, after the budget was published.
Canadian bonds were little changed across the curve with a bias lower. Lascelles said the government's plan to issue about C$95 billion in domestic marketable bonds was higher than he had expected.
The two-year Canadian government bond
Lascelles said the muted market reaction may also be attributed to reluctance ahead of the U.S. nonfarm payrolls data for February on Friday. [ID:nN02150933] (Reporting by Ka Yan Ng; editing by Peter Galloway)