* Canadian dollar at C$1.1057 or 90.44 U.S. cents
* Bond prices lower across the maturity curve
By Leah Schnurr
TORONTO, Feb 11 The Canadian dollar was little
changed against the greenback on Tuesday as investors took in
comments from new U.S. Federal Reserve Chair Janet Yellen, who
said the labor market recovery is far from complete despite a
drop in unemployment.
Still, Yellen also said the central bank expects to continue
trimming its policy stimulus in measured steps amid broader
improvements in the economy.
The Fed has reduced its asset purchase program twice since
late last year and now buys $65 billion in bonds a month to keep
borrowing costs low and boost the economy.
As Yellen takes the helm from former Fed Chairman Ben
Bernanke, who ended his term last month, markets are looking for
insight into how further reductions in stimulus are likely to
handled by the Fed.
"The main takeaway from the prepared remarks is essentially
a message that signals continuity from the Federal Reserve,"
said Scott Smith, senior market analyst at Cambridge Mercantile
Group in Calgary.
"It confirms our view that with this continuity in Fed
policy, it'll reassure markets that the recovery in the U.S. is
coming along as expected."
Yellen was set to face questions from U.S. lawmakers later
The Canadian dollar was at C$1.1057 to the
greenback, or 90.44 U.S. cents, slightly weaker than Monday's
close of C$1.1055, or 90.46 U.S. cents.
On the home front, the Canadian government will present its
2014-15 budget later on Tuesday. The budget is expected to be
lacking in any big new measures but to lay the groundwork for a
return to a surplus in 2015.
The release of the budget is unlikely to spark much reaction
in the loonie, Smith said. "We're on some pretty strong ground
in terms of our fiscal situation and that's always been a
shining light for Canada," he added.
"We've already got the good news about the fiscal deficit
baked into the loonie, so I don't expect many surprises today
with the actual release of the numbers, unless they deviate and
come out with a big surprise from what (Finance Minister Jim)
Flaherty has echoed to the market."
With little else on the domestic economic calendar this
week, the Canadian dollar could be searching for direction. The
currency regained some ground last week after hitting a 4-1/2
year low, but analysts expect its ultimate path is still likely
Canadian government bond prices were lower across the
maturity curve, with the two-year off 3 Canadian
cents to yield 0.998 percent, and the benchmark 10-year
down 33-1/2 Canadian cents to yield 2.447 percent.