CANADA FX DEBT-C$ weakens slightly; focus on the Bank of Canada

Wed Apr 17, 2013 9:16am EDT

* Canada dollar at C$1.0259 vs US$, or 97.48 U.S. cents
    * Hits weakest since March 20
    * Bank of Canada news due at 10 a.m.
    * Central bank expected to hold rates, trim growth forecasts

    By Alastair Sharp
    TORONTO, April 17 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart in morning trade on Wednesday as
investors awaited news from the central bank, which is widely
expected to trim its optimistic growth forecast and may even
drop a weak tightening bias.
    The Bank of Canada announces its interest rate decision and
releases its quarterly Monetary Policy Report at 10 a.m. (1400
GMT). The bank is widely expected to keep interest rates on hold
and many also expect it to acknowledge the weakness seen in
Canadian data during the first quarter. 
    "The market certainly seems to be trading with an
expectation that the statement will be a little bit more dovish
again," said Matt Perrier, managing director of foreign exchange
sales at BMO Capital Markets.
    "Whether that means a complete taking out of the future
tightening bias which has already been pushed down the road or
not remains to be seen."
    Canada has been an outlier among major developed economies
in maintaining a view that rates will eventually rise, eschewing
the unconventional monetary easing proving so popular at the
U.S. Federal Reserve, Bank of England, and now in drastic
fashion at the Bank of Japan
    At 8:45 a.m. the Canadian dollar was trading at
C$1.0259 to the greenback, or 97.48 U.S. cents, compared with
C$1.0205, or 97.99 U.S. cents, at Tuesday's North American
close.
    At one point it hit C$1.0266, its weakest point versus the
greenback since March 20.
    The price of Canadian government debt was higher across the
curve, with the two-year bond up 2 Canadian cents to
yield 0.928 percent, while the benchmark 10-year bond
 rose 12 Canadian cents to yield 1.724 percent.
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