CANADA FX DEBT-C$ steady after central bank comments

Thu Apr 24, 2014 5:30pm EDT

* Canadian dollar at C$1.1028 or 90.68 U.S. cents
    * Bond prices mostly higher across the maturity curve

 (Adds details on speech by Bank of Canada governor, quotes,
updates prices)
    By Leah Schnurr
    TORONTO, April 24 (Reuters) - The Canadian dollar was little
changed against the greenback on Thursday after a speech by the
head of the Bank of Canada offered little new insight on the
path of monetary policy, allowing the currency to stick to its
recent trading range.
    The speech by central bank Governor Stephen Poloz had been a
focal point for markets in an otherwise quiet session, with no
major economic data on offer. Central bank policy has been a
major driver of the loonie since the bank shifted to a more
dovish stance last October.
    The loonie showed little reaction after Poloz said he has
become more hopeful about the recovery of the country's exports,
though he cautioned that if exports do worse than expected,
overall inflation will fall again and drift further from the
bank's target. 
    Asked about the future direction of interest rates, Poloz
said the central bank remains neutral on whether the next rate
move will be up or down. 
    "Obviously he's concerned about the absence of inflation,"
said Gareth Sylvester, director at Klarity FX in San Francisco.
"They want to see inflation get back to their 2 percent target
so that their monetary policy tools are in their back pocket,
but it's not really new news."
    The Canadian dollar ended the North American
session at C$1.1028 to the greenback, or 90.68 U.S. cents, a tad
stronger than Wednesday's close of C$1.1032, or 90.65 U.S.
cents.
    After hitting a 4-1/2 year low hit in March, the loonie had
bounced back but its rally has lost momentum over the last two
weeks as investors weigh modestly improving economic data
against a still-neutral Bank of Canada.
    That has left the Canadian dollar moving mostly sideways in
recent sessions as it hovers around the technically important
C$1.10 level.
    "Foreign exchange markets can do this from time to time.
You'll see lots of volatility and then they'll fall into very
narrow and tight ranges," Sylvester said.
    A lack of liquidity during the recent Easter holidays may
also have contributed to the sideways trading, he added.
    Canadian government bond prices were mostly higher across
the maturity curve, though the two-year was unchanged
to yield 1.066 percent, while the benchmark 10-year 
was up 10 Canadian cents to yield 2.421 percent.

 (Editing by Peter Galloway)
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