CANADA FX DEBT-C$ firms as market braces for economic, central bank news

Mon Apr 28, 2014 4:36pm EDT

* Canadian dollar at C$1.1025 or 90.70 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details on market activity, quotes, updates prices)
    By Leah Schnurr
    TORONTO, April 28 (Reuters) - The Canadian dollar firmed
against the greenback on Monday, though gains were slight as
investors kept an eye on tensions in Ukraine and geared up for a
busy week for economic data and central bank policy.
    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.
    "It's been overly quiet, not just today, but over the past
week," said Greg Moore, senior currency strategist at Royal Bank
of Canada in Toronto.
    "U.S. dollar-Canadian dollar really hasn't been shaken from
this very tight trading range that it's been in for six or seven
days now."
    New sanctions were announced on Monday against allies of
Russian President Vladimir Putin, a move that Moscow denounced
as "Cold War" tactics.
    At the same time, pro-Moscow rebels were holding a group of
German and other military observers for a fourth day. These
developments limited that market's risk appetite early in the
session, though Moore said the fact that there wasn't a stronger
reaction suggests the market is showing some fatigue over the
headlines. 
    The Canadian dollar ended the North American
session at C$1.1025 to the greenback, or 90.70 U.S. cents,
slightly stronger than Friday's close of C$1.1036, or 90.61 U.S.
cents.
    Investors will get a chance to evaluate the Bank of Canada's
policy stance when central bank 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 Scott
Smith, senior market analyst at Cambridge Mercantile Group in
Calgary.
    "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 on
Tuesday and Wednesday of the U.S. Federal Reserve, which is 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.
    "My bias is that the U.S. side of the equation should factor
in a little bit more strongly to the currency reaction," Moore
said.
    Canada issued its first ultra long-term 50-year bond on
Monday, the Department of Finance said, a move that will let the
government capitalize on the current low interest rate
environment. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year off 2 Canadian
cents to yield 1.077 percent, and the benchmark 10-year
 down 34 Canadian cents to yield 2.447 percent.

 (Editing by Peter Galloway)
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