CANADA FX DEBT-C$ firms ahead of Bank of Canada statement

Wed Mar 5, 2014 9:09am EST

* Canadian dollar at C$1.1074 or 90.30 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, March 5 (Reuters) - The Canadian dollar firmed
against the greenback on Wednesday, ahead of a Bank of Canada
announcement later in the morning that is expected to see the
central bank maintain its neutral policy stance.  
    The loonie also got some support from data overseas that
showed robust growth in the global services sector last month.
That was in contrast with recent data that showed manufacturing
growth in Europe and Asia slowed in February. 
    Markets were generally less nervous about geopolitical risks
than they had been earlier in the week as the United States and
Russia were set to hold talks on easing tensions over Ukraine.
 
    At home, investors focused on the policy announcement from
the Bank of Canada due at 10:00 am ET (1500 GMT). With the
central bank expected to hold rates at 1 percent, analysts will
be parsing the statement for any change in language.
    The Bank of Canada shifted to a more dovish policy stance
last year and left the door open to a cut in interest rates at
its most recent meeting in January, saying it was concerned
about the weak inflation environment.
    But data since then showed January's inflation rate rose
more than expected and analysts say that will likely prompt the
central bank to hold the line on Wednesday.
    "The Bank should be a little less worried and rate cuts are
that much less likely, and we see that priced into markets,"
said Benjamin Reitzes, senior economist at BMO Capital Markets
in Toronto.
    The Canadian dollar was at C$1.1074 to the
greenback, or 90.30 U.S. cents, stronger than Tuesday's close of
C$1.1100, or 90.09 U.S. cents.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 1 Canadian
cent to yield 1.035 percent and the benchmark 10-year
 down 12 Canadian cents to yield 2.483 percent.
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