CANADA FX DEBT-C$ near 4-year lows on expectations of dovish BoC

Tue Jan 14, 2014 10:04am EST

* Canadian dollar at C$1.0909 or 91.67 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, Jan 14 (Reuters) - The Canadian dollar was trading
near its weakest level in four years against its U.S.
counterpart on Tuesday as investors remained concerned ahead of
next week's Bank of Canada interest rate decision and policy
statement.
    The Canadian dollar extended losses after Canada's junior
finance minister, Kevin Sorenson, said the country's
manufacturing sector was happy with the weaker currency, adding
that it presented "remarkable opportunities." 
    The currency drifted modestly lower following data that
showed U.S. consumer spending rose more than expected last
month, which gave the greenback a moderate boost. But downward
revisions of earlier months provided a mixed picture.
    "Retail sales number I don't think was a huge influence ...
It was a bit of a wash, to be honest," said Mark Chandler, head
of Canadian fixed income and currency strategy at RBC Capital
Markets. Chandler said concerns about next week's central bank
meeting was overhanging the currency.
    "There's a hanful of data between now and then for Canada,
but none of which will move the needle too much. I expect the
Canadian dollar will remain a bit vulnerable until we get to
that point," he said, adding that none of the economic data
until then are expected to be big movers.
    The Canadian dollar was at C$1.0909 to the
greenback, or 91.67 U.S. cents around 9:25 a.m. (14:25 GMT),
weaker than Monday's North American close at C$1.0846 to the
greenback, or 92.20 U.S. cents.
    This was not far from the C$1.0946 hit on Friday, the
currency's weakest level since October 2009, following a dismal
December employment report.
    The jobs report fueled expectations the Bank of Canada will
maintain its recent dovish stance, one of the factors that is
seen keeping pressure on the loonie in 2014.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year bond down 3.5
Canadian cents to yield 1.052 percent and the benchmark 10-year
 down 17 Canadian cents to yield 2.566 percent.
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