* C$ at C$1.0322 vs US$, or 96.87 U.S. cents
* Touches C$1.0337 shortly after decision
* Rates on hold for "a period of time"-central bank
* Pace of purchasing activity in Canada slowed in Feb
By Solarina Ho
TORONTO, March 6 The Canadian dollar weakened
against the U.S. dollar to trade near 8-month lows on Wednesday
after the Bank of Canada held interest rates steady and softened
its stance on the need for tightening monetary policy.
The central bank said it will likely hold its benchmark rate
steady for "a period of time," a tweak from the "less imminent"
language used in January.
The central bank held its overnight lending target unchanged
- as widely expected - at 1.0 percent, where it has been since
"They haven't completely disbanded the very mild tightening
bias, but they have found a way to split the hair a little bit
further," said Doug Porter, chief economist at BMO Capital
"It probably is one further slip on the dial lower than what
we would've expected and I think the market expected as well."
At 12:15 p.m. (1715 GMT), the Canadian dollar was
trading at C$1.0322 versus the U.S. dollar, or 96.87 U.S. cents,
weaker than C$1.0288 just before the central bank announcement
and its North American finish on Tuesday at C$1.0280.
Shortly after the decision, the currency softened to
C$1.0337, near the 2013 low of C$1.0343 it hit on Friday, which
was the weakest the currency had been since June 28.
"It's contributing a bit of weakness but I think it will be
fairly limited - this isn't a dramatic shift," said Paul Ferley,
assistant chief economist at Royal Bank of Canada.
In other data, the pace of purchasing activity in Canada
slowed in February for the second straight month, according to
the Ivey Purchasing Managers Index.
The seasonally adjusted index fell to 51.1 in February from
58.9 in January. Analysts polled by Reuters had expected an
adjusted reading of 57.5.
The figures took a significant back seat to the Bank of
Canada announcement. But they did reinforce a concern about
slowing growth that has prompted some analysts to turn bearish
on the near-term prospects for the currency.
Still, a Reuters poll on Wednesday showed forecasters expect
the Canadian dollar will recover some of its early 2013 losses
and trade at equal value against its U.S. counterpart by the end
of this year.
Canada's performance was mixed against a basket of other
major currencies, outperforming the Japanese yen, but
underperforming its commodities-linked sister currency, the
Bond prices were mixed. The two-year bond was up
4 Canadian cents and yielding 0.934 percent, while the benchmark
10-year bond was off 11 Canadian cents and yielding