CANADA FX DEBT-C$ edges higher ahead of Bank of Canada decision

Tue Mar 5, 2013 9:52am EST

* C$ at C$1.0272 vs US$, or 97.35 U.S. cents
    * C$ has weakened more than 3 percent since January
    * Bank of Canada expected to keep interest rates unchanged
    * At least five central banks announce rate decision this
week

    By Solarina Ho
    TORONTO, March 5 (Reuters) - The Canadian dollar was
marginally stronger on Tuesday against its U.S. counterpart as
investors remained mostly sidelined ahead of the Bank of
Canada's rate decision and policy statement on Wednesday.
    The currency tracked global markets, strengthening as
investors bet major central banks would keep monetary policy
easy at meetings this week. 
    Australia's Reserve Bank kept interest rates at record lows
overnight. The Bank of Japan, the Bank of England and the
European Central Bank are all expected to either keep current
loose policies in place or add extra stimulus after their
meetings this week.
    "The Bank of Canada has been the main source for this recent
loonie weakness over the last month or so," said Darren
Richardson, corporate dealer at CanadianForex, a commercial
foreign exchange dealing firm, referring to the colloquial name
for the Canadian dollar.
    It has weakened more than 3 percent since the Bank of Canada
toned down its more hawkish stance in January, saying the
withdrawal of monetary policy stimulus was "less imminent than
previously anticipated." 
    That language has prompted economists and forecasters to
predict the central bank will likely hold interest rates
unchanged until the first quarter of 2014. 
     "It will be interesting to see if they confirm that
tomorrow. All eyes are on the Bank of Canada," said Richardson,
adding that the Bank's choice of language could provide
direction for Canada's dollar over the next month or so.
    At 9:22 a.m. (1422 GMT), the Canadian dollar was
trading at C$1.0272 versus the U.S. dollar, or 97.35 U.S. cents,
 slightly firmer than its North American finish at C$1.0277, or
97.30 U.S. cents on Monday.
    The Canadian dollar was trading within a narrow, 21-point
range and mostly underperforming other currencies on Tuesday.
    Richardson expected the currency to trade between C$1.0250
and C$1.2080 for the day.
    Canadian government bond prices were lower across the curve.
The two-year bond was off 2.5 Canadian cents and
yielding 0.958 percent, while the benchmark 10-year bond
 was down 16 Canadian cents to yield 1.827 percent.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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