January 17, 2018 / 2:43 PM / a year ago

CANADA FX DEBT-C$ flat vs stronger greenback ahead of potential rate hike

    * Canadian dollar at C$1.2433, or 80.43 U.S. cents
    * Bond prices dip across much of the yield curve

    By Fergal Smith
    TORONTO, Jan 17 (Reuters) - The Canadian dollar steadied
against its U.S. counterpart on Wednesday as the greenback
broadly rose and investors prepared for a potential interest
rate hike by the Bank if Canada.
    The central bank will announce its interest rate decision
and release its Monetary Policy Report at 10 a.m. ET (1500 GMT).
Money markets expect a rate increase and at least two more by
the end of the year.           
    The Bank of Canada's benchmark interest rate sits at 1
percent.
    "The BoC has no problem surprising markets but it has had
enough good news to deliver 25 basis points," Elsa Lignos,
global head of FX strategy at RBC Europe Limited, said in a
research note.
    Lignos pointed to "very strong job gains, a multi-decade low
in unemployment and increasing signs of capacity pressures from
the BOS (Business Outlook Survey)."
    Still, worries that U.S. President Donald Trump could soon
announce that the United States intends to pull out of the North
American Free Trade Agreement could temper prospects for
additional rate hikes this year. The sixth round of talks on
renegotiating NAFTA is due to take place in Montreal on Jan.
23-28.
    The U.S. dollar        gained against a basket of major
currencies as the euro pulled back from a three-year high above
$1.23.             
    At 9:17 a.m. EST (1417 GMT), the Canadian dollar         
was unchanged at C$1.2433 to the greenback, or 80.43 U.S. cents.
    The currency traded in a range of C$1.2411 to C$1.2461. It
touched its strongest in one week on Tuesday at C$1.2397.   
    The price of oil, one of Canada's major exports, edged lower
after reaching a three-year high intraday on Tuesday. U.S. crude
       prices were down 0.2 percent at $63.63 a barrel.
            
    Canadian government bond prices were slightly lower across
much of the yield curve in sympathy with U.S. Treasuries. The
two-year            was down 2 Canadian cents to yield 1.784
percent and the 10-year             declined 4 Canadian cents to
yield 2.177 percent.

 (Reporting by Fergal Smith; Editing by Frances Kerry)
  
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