CANADA FX DEBT-Canadian dlr firms, Bank of Canada still in focus
* Canadian dollar at C$1.0951 or 91.32 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Jan 20 (Reuters) - The Canadian dollar firmed against the greenback on Monday in muted trade 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 in the fourth quarter at an annualized rate of 7.7 percent, 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 ended the North American session at C$1.0951 to the greenback, or 91.32 U.S. cents, stronger than Friday's close of C$1.0976, or 91.11 U.S. cents. The Canadian dollar was also continuing to consolidate after falling to a more than four-year low last week. "We've definitely over the last week or so consolidated toward this C$1.095 region, really just waiting for the next catalyst to determine the move," said David Tulk, chief Canada macro strategist at TD Securities in Toronto. Those catalysts should come from some domestic economic data due this week, as well as the Bank of Canada's interest rate decision and policy statement on Wednesday, said Tulk. 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 this month, 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. "They have every incentive in the world to sound quite dovish," said Tulk. "There is some thought out there that the Bank will go as far as introducing an outright easing bias, I don't think that criteria for that type of change in policy is warranted." Canadian government bond prices were higher across the maturity curve, with the two-year up 1 Canadian cent to yield 1.018 percent and the benchmark 10-year up 9 Canadian cents to yield 2.492 percent.
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