CANADA FX DEBT-C$ weaker ahead of data, BoC decision this week

Mon Oct 21, 2013 9:57am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ at C$1.0300 vs US$, or 97.09 U.S. cents
    * Wholesale trade rises 0.5 percent in August
    * Bond prices mostly lower across maturity curve

    By Leah Schnurr
    TORONTO, Oct 21 (Reuters) - The Canadian dollar weakened
slightly on Monday as investors were wary of taking aggressive
bets ahead of some key data reports on both sides of the border
this week, as well as an interest rate decision from the Bank of
Canada. 
    Economic data reports delayed by this month's partial U.S.
government shutdown will be released in the coming weeks. One of
the most important for markets, the unemployment report for
September, will be released on Tuesday. At home, investors will
also take in Canadian retail sales for August.
    The shutdown has raised concerns about how much of a bite it
will take out of the already fragile U.S. economic recovery.
That casts some uncertainty on Canada's economic prospects, as
the United States is Canada's largest trading partner.
    Investors are also speculating that the impact from the
shutdown will see the Federal Reserve maintain the current pace
of its economic stimulus program for longer than had been
expected.
    "It's sleepy price action to start off the week," said Scott
Smith, senior market analyst at Cambridge Mercantile Group in
Calgary.
    "We've got a lot of data coming down the pipe, so I think
people are weighing what the expectations for those (releases)
are." 
    The Canadian dollar was at C$1.0300 versus the
greenback, or 97.09 U.S. cents, weaker than Friday's close of
C$1.0294, or 97.14 U.S. cents.
    Investors were also staying on the sidelines ahead of an
interest rate decision from the Bank of Canada, due on
Wednesday. The central bank is expected to keep rates steady at
1 percent. 
    The accompanying statement will likely be a bigger focal
point, with investors sensitive to any change in tone that might
indicate when the bank will eventually raise rates.
    "The Bank of Canada has held a relatively hawkish tightening
(bias) over the last few statements," said Smith.
    "The risk is we start to see a little softening of language
on the Bank of Canada side of things and maybe looking toward
more of an emphasis on boosting export growth and holding off on
interest rates until we see that slack removed from the
economy." 
    The loonie saw little reaction to domestic data on Monday
that showed wholesale trade rose in August, helped by stronger
auto sales. 
    Government bond prices were mostly lower across the maturity
curve with the two-year bond off 1 Canadian cent to
yield 1.186 percent and the benchmark 10-year bond 
falling 12 Canadian cents to yield 2.544 percent.