CANADA FX DEBT-C$ firms, bouncing from last week's losses

Mon Feb 24, 2014 9:48am EST

* Canadian dollar at C$1.1075 or 90.29 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Feb 24 (Reuters) - The Canadian dollar firmed
against the greenback on Monday, stabilizing after recent losses
and as this week's light economic calendar left the loonie with
few near-term catalysts.
    Investors were taking in comments from Bank of Canada
Governor Stephen Poloz made over the weekend that two months of
stronger domestic inflation has made the central bank feel a
little more comfortable. 
    Data on Friday showed Canada's annual inflation rate jumped
to its highest level in 1-1/2 years in January. At its most
recent meeting last month, the Bank of Canada said it had become
more concerned about weak inflation. Still, Poloz's comments did
not appear to have much impact on the loonie in early Monday
trade.
    The Canadian dollar was benefiting from a slight improvement
in risk appetite in the markets, said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    "With the absence of domestic data until really Friday,
we'll be in a bit of a consolidative pattern. I could see the
loonie gaining a little bit of strength after that sharp
sell-off we saw earlier last week," said Smith.
    The Canadian dollar was at C$1.1075 to the
greenback, or 90.29 U.S. cents, stronger than Friday's close of
C$1.1133, or 89.82 U.S. cents.
    If the currency pair continues to consolidate, the Canadian
dollar could firm to as far as about C$1.1020, while any
declines should be capped in the low C$1.11 area over the next
day or two, said Smith.  
    The loonie tumbled last week, interrupting February's run
higher after the currency hit a 4-1/2-year low at the end of
January. The U.S. dollar appreciated by about 1 percent against
the loonie last week. 
    Investors will have to wait until Thursday's current account
figures before they get any Canadian economic data. But Friday
will be the main focus when fourth-quarter gross domestic
product will be released. Growth is expected to slip to an
annualized 2.5 percent.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3-1/2 Canadian
cents to yield 1.030 percent and the benchmark 10-year
 down 8-1/2 Canadian cents to yield 2.528 percent.
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