CANADA FX DEBT-C$ flat as market eyes Bank of Canada decision

Wed Apr 16, 2014 9:22am EDT

* Canadian dollar at C$1.0977, or 91.10 U.S. cents
    * Bond prices mostly lower across the maturity curve
    * Bank of Canada expected to hold rates steady

    By Solarina Ho
    TORONTO, April 16 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Wednesday, as the market
awaited a Bank of Canada interest-rate decision and monetary
policy report later in the morning.
    While the central bank is expected to hold rates steady, the
market will examine the bank's language in the report for any
change in tone and look at its quarterly economic projections
for insight into the direction of monetary policy.
    "It's our assumption that they'll be a little less dovish
than they've been in the past. I'm afraid though that's pretty
much what the markets braced for," said Mark Chandler, head of
Canadian fixed income and currency strategy at Royal Bank of
Canada.
    "The outlook, the nuts and bolts of it ... the official
neutral bias, all those will be the same. We're talking about a
pretty subtle shading on this, therefore we shouldn't expect a
big market reaction."
    The Canadian dollar was trading at C$1.0977, or
91.10 U.S. cents, at 9:02 a.m. (1302 GMT), unchanged from
Tuesday's close.
    RBC's official expected trading range for Wednesday was
between C$1.0970 and C$1.1030.
    Further direction for the market could come from broader
currency moves, with Fed Chair Janet Yellen due to speak on
monetary policy and the economic recovery later on Wednesday.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down 1.7 Canadian
cents to yield 1.055 percent and the benchmark 10-year
 slipping 17 Canadian cents to yield 2.407 percent.

 (Reporting by Solarina Ho; Editing by Bernadette Baum)
FILED UNDER: