CANADA FX DEBT-C$ holds steady after sharp drop

Tue Jul 8, 2014 9:21am EDT

* Canadian dollar at C$1.0678 or 93.65 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, July 8 (Reuters) - The Canadian dollar was little
changed against the greenback on Tuesday, stabilizing after the
previous session's sharp decline as a lack of domestic data on
tap left the currency drifting.
    The loonie lost 0.3 percent on Monday, as it was driven
lower by a disappointingly weak report on purchasing activity in
June. 
    Investors are also trying to gauge whether the Bank of
Canada will stick to its neutral tone when it releases its
monetary policy statement next week or whether a recent strong
inflation report will force the central bank to alter its
message.
    The main economic event this week will be Friday's
employment report, but once that report is released, attention
is likely to focus solely to the Bank of Canada's meeting on
July 16, analysts say.
    "It's hard to break out of these ranges until we get through
our employment report on Friday," said Mark Chandler, head of
Canadian fixed income and currency strategy at Royal Bank of
Canada in Toronto.
    "If we have a swing and a miss on our employment report, you
could have an accumulation of decent (economic) evidence in the
U.S. and our Bank likely to be cautious, so that wouldn't be a
good prescription for the currency."
    The Canadian dollar was at C$1.0678 to the
greenback, or 93.65 U.S. cents, nearly flat to Monday's close of
C$1.0677, or 93.66 U.S. cents.
    Despite Monday's pullback, the loonie is still up about 2.5
percent since early June following a rally fueled by the firmer
inflation data, higher oil prices and a better outlook for
global growth.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 4 Canadian cents
to yield 1.113 percent and the benchmark 10-year up
30 Canadian cents to yield 2.268 percent.












 (Editing by Chizu Nomiyama)
FILED UNDER: