CANADA FX DEBT-C$ firms as investors prepare for busy week

Mon Apr 28, 2014 9:42am EDT

* Canadian dollar at C$1.1022 or 90.73 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, April 28 (Reuters) - The Canadian dollar firmed
against the greenback on Monday, though gains were modest as
investors kept an eye on geopolitical tensions in Ukraine and
geared up for a busy week of economic data and central bank
policy.
    New sanctions were announced against some Russians in an
attempt to stop President Vladimir Putin from fomenting the
rebellion in eastern Ukraine. 
    At the same time, pro-Moscow rebels showed no sign of
curbing their uprising, seizing public buildings in another town
in the east. The developments capped market risk
appetite. 
    "There's definitely some political tensions and potential
ramifications from another round of sanctions that I think will
keep a lid on risk appetite," said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    The Canadian dollar was at C$1.1022 to the
greenback, or 90.73 U.S. cents, slightly stronger than Friday's
close of C$1.1036, or 90.61 U.S. cents.
    The currency is likely to trade between C$1.1050 and
C$1.0960 for the session, said Smith.
    The loonie has been trading mostly sideways in recent
sessions, hovering around the technically important C$1.10 level
as investors weigh modestly improving domestic economic data
against a still-neutral Bank of Canada.
    Investors will get a chance to evaluate that policy stance
when Bank of Canada officials testify on Parliament Hill on
Tuesday and Wednesday. Governor Stephen Poloz reiterated last
week that the central bank's next move on rates could be either
up or down. 
    "The big thing whenever Poloz is speaking now is whether he
changes his tone or stance in terms of policy," said Smith.
    "As of right now, the Bank of Canada is officially neutral
on interest rates but when Poloz speaks, he usually tends to
take the dovish side of neutral. (In) a lot of his undertones,
he does reiterate his cautious optimism on the Canadian economy
and what needs to happen in order to get us through this trying
period."
    Markets will also be focused on a policy-setting meeting of
the Federal Reserve, with the central bank set to continue
winding down its stimulus program. 
    The Canadian dollar could also take direction from a slew of
U.S. economic data this week, culminating with the April
unemployment report at the end of the week. At home, investors
will get Canadian monthly gross domestic product data on
Wednesday.
    The Department of Finance said on Monday Canada may issue an
ultra long-term bond that matures is 50 years in the near
future. The current maximum maturity on federal bonds is 30
years. 
    Canadian government bond prices were mostly lower across the
maturity curve, though the two-year was unchanged to
yield 1.065 percent, while the benchmark 10-year was
off 9 Canadian cents to yield 2.419 percent.

 (Editing by Meredith Mazzilli)
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