CANADA FX DEBT-C$ little changed ahead of Bank of Canada decision

Tue Mar 5, 2013 5:01pm EST

* C$ at C$1.0280 vs US$, or 97.28 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 finished
little changed on Tuesday against its U.S. counterpart, with
investors mostly sidelined ahead of a rate decision and policy
statement by the Bank of Canada's on Wednesday.
    The Bank of Canada is one of several major central banks
expected to 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, for its part, is expected to hold
interest rates steady at 1 percent. However, investors will be
closely dissecting the central bank's language for any change in
tone.
    "I would say given the weakness, there's some flexibility on
their part to perhaps to be a bit more cautious," said David
Tulk, chief Canada macro strategist at TD Securities.
    "Our base case is that they still want to reiterate the view
that rates will go up; it just may take a very long term."
    The Canadian dollar 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. 
    "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.
    The Canadian dollar finished its North American
session at C$1.0280 versus the U.S. dollar, or 97.28 U.S. cents,
 slightly firmer than Monday's finish at C$1.0277, or 97.30 U.S.
cents on Monday.
    It was broadly underperforming other currencies on Tuesday.
    Canadian government bond prices were lower across the curve.
The two-year bond was off 2 Canadian cents and
yielding 0.955 percent, while the benchmark 10-year bond
 was down 5 Canadian cents to yield 1.815 percent.
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