CANADA FX DEBT-C$ ends little changed after tame inflation data

Fri Sep 21, 2012 4:21pm EDT
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* C$ ends at $0.9764 vs US$, or $1.0242
    * Higher oil, commodity prices support
    * Tame Canada inflation data has little impact
    * Little pressure on Bank of Canada to raise rates
    * Bond prices rise

    By Andrea Hopkins
    TORONTO, Sept 21 (Reuters) - The Canadian dollar ended
little changed on Friday, with the benefit of stronger oil and
other commodity prices offset by tame inflation data that
suggested the Bank of Canada will be in no hurry to raise
interest rates.
    Energy prices rose on supply concerns and expectations that
Spain will seek a bailout that could help resolve its debt
    But Canada's annual inflation rate in August slipped to 1.2
percent from 1.3 percent in July, well below the central bank's
2 percent target. This reinforced expectations that the Bank of
Canada will not raise rates any time soon. Analysts polled by
Reuters has forecast the rate would stay at 1.3 percent.
    "For the day, the range that one was expecting this morning
has happened. There has been no outlier news -- CPI was benign
with respect to market expectations," said Jack Spitz, managing
director of foreign exchange at National Bank Financial. 
    The central bank started signaling in April it might raise
rates if the economy continued to grow.
    The Canadian dollar finished the session at
C$0.9764 against the U.S. dollar, or $1.0242, little changed
from Thursday's North American finish at C$0.9765, or $1.0241.
The currency had hit a 13-month high of C$0.9633 on Sept. 14.
    "I'd suggest (there's been) some position squaring into the
weekend after some significant gains by the Canadian dollar
heading into the week," Spitz said.
    The currency's flat day contrasted strength in the euro on
speculation that Spain may soon request financial aid. 
    Sources with knowledge of the matter told Reuters Spain is 
considering freezing pensions and speeding up a rise in the 
retirement age as it attempts to meet conditions of an 
international aid package. 
    Canadian government bond prices rose, with the two-year bond
 edging up 1 Canadian cent to yield 1.137 percent, and
the benchmark 10-year bond up 8 Canadian cents,
yielding 1.849 percent.