CANADA FX DEBT-C$ firms but Bank of Canada still in focus

Mon Jan 20, 2014 9:30am EST

* Canadian dollar at C$1.0946 or 91.36 U.S. cents
    * Bond prices up across the maturity curve

    By Leah Schnurr
    TORONTO, Jan 20 (Reuters) - The Canadian dollar firmed
against the greenback on Monday in what was expected to be a
quiet trading day with U.S. markets closed, while focus was on
the Bank of Canada's policy-setting meeting later in the week.
    The loonie got some support from data released overnight
that showed China's economy grew at an annualized rate of 7.7
percent in the fourth quarter, slightly above expectations.
Still, some economists say a cooldown in the world's
second-largest economy will be inevitable this year.
 
    Overnight market action showed some "cautious optimism" over
the data, said Scott Smith, senior market analyst at Cambridge
Mercantile Group in Calgary.
    "It's still that narrative that we're seeing a slight
slowdown in Chinese growth, which most analysts have forecast
for the Chinese economy in 2013 and 2014 as the government goes
through its reform process," said Smith.
    The Canadian dollar was at C$1.0946 to the
greenback, or 91.36 U.S. cents, stronger than Friday's close of
C$1.0976, or 91.11 U.S. cents.
    Smith said he expects the Canadian currency to trade in a
narrow range of C$1.09 to C$1.10 up until Wednesday morning,
before the Bank of Canada releases its policy statement and
interest rate decision.
    The Bank of Canada shifted gears in October last year,
dropping any talk of rate hikes after 18 months of signaling
that tightening was on the horizon. The change has weighed
heavily on the Canadian dollar.
    After some disappointing economic data earlier in January,
including a surprise increase in the unemployment rate, some
analysts expect the central bank could sound more dovish in its
statement on Wednesday, to the further detriment of the loonie.
 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1-1/2 Canadian
cents to yield 1.015 percent and the benchmark 10-year
 up 19 Canadian cents to yield 2.479 percent.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article