CANADA FX DEBT-C$ steady on benign CPI data; U.S. economy in focus

Fri Oct 18, 2013 10:02am EDT

* C$ at C$1.0291 vs US$, or 97.17 U.S. cents
    * Focus on Federal Reserve and U.S. economy after budget
deal
    * Canadian inflation holds steady, as expected
    * Bond prices higher across maturity curve

    By Solarina Ho
    TORONTO, Oct 18 (Reuters) - The Canadian dollar was little
changed on Friday after a benign inflation report and held
steady against its U.S. counterpart, which slipped to more than
eight-month lows as the markets consider the economic impact of
the U.S. government shutdown and implications for the Federal
Reserve's policy decisions.
    Political wrangling over the U.S. budget partially shut down
the government for two weeks before Washington lawmakers
finalized a temporary agreement this week. Investors are
speculating whether the Federal Reserve will push monetary
policy changes further back as a result. 
    "For now, when it comes to USD/CAD, it's purely a play on
the U.S. dollar. A lot of people have been seeing a lot of
weakness in the U.S. dollar," said Mazen Issa, macro strategist
at TD Securities. 
    "Generally speaking, markets have been on a risk-on mood,
which is a little bit more of a benefit to the Canadian dollar
and commodities-intensive currencies."
    Canada's annual inflation rate was unchanged at 1.1 percent
in September and core inflation was unchanged at 1.3 percent,
both under the Bank of Canada's target rate of 2.0 percent,
according to Statistics Canada. 
    Issa said the report was mostly in line with expectations, 
and reaction from the Canadian dollar would be limited.
    The Canadian dollar was trading at C$1.0291 versus
the greenback, or 97.17 U.S. cents at 9:21 a.m. (1321 GMT),
little changed from Thursday's session finish at C$1.0293, or
97.15 U.S. cents.
    The currency was expected to trade between C$1.0270 and
C$1.0320 for the session, Issa said.
    Government bond prices were positive across the maturity
curve with the two-year bond gaining 1.5 Canadian
cents to yield 1.170 percent and the benchmark 10-year bond
 adding 22 Canadian cents to yield 2.534 percent.
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