CANADA FX DEBT-C$ firmer but expected to stay range-bound

Tue Mar 25, 2014 9:55am EDT
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* Canadian dollar at C$1.1182 or 89.43 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, March 25 (Reuters) - The Canadian dollar firmed
modestly against the greenback on Tuesday, though analysts
expected it to stick to a range as a dearth of domestic economic
data this week is leaving the currency with few catalysts to
trade off.  
    Geopolitical tensions continued to simmer after the Group of
Seven major industrialized nations warned Russia it faces
additional economic sanctions if it takes further action to
destabilize Ukraine, but global markets appeared to take te
situation in stride.
    The Kremlin on Tuesday said it was keen to maintain contact
with G8 partners. 
    Investors also continued to digest declines in the loonie
last week that were spurred by more dovish-than-expected
comments from Bank of Canada Governor Stephen Poloz and U.S.
Federal Reserve open market committee (FOMC) remarks about a
potentially faster timetable for raising interest rates. The
Canadian dollar hit a 4-1/2-year low late last week.
    The loonie has been able to regain some ground since then
and investors expect it to consolidate in the short term.
    "All in all, we just really seem to be in a period of rest
here where the market's digesting the combination of Governor
Poloz's tone, as well as the FOMC meeting last week," said
Camilla Sutton, chief currency strategist at Scotiabank in
    "Overnight, most major currencies traded within a 30-point
range, so it's fairly quiet across the board."
    The Canadian dollar was at C$1.1182 to the
greenback, or 89.43 U.S. cents, slightly stronger than Monday's
close of C$1.1195, or 89.33 U.S. cents.
    Technicals still suggest further Canadian dollar weakness,
Sutton said.
    Without any major Canadian data on tap until next Monday,
when monthly gross domestic product will be released, investors
were watching economic data out of the United States.
    Figures on Tuesday showed U.S. home prices rose slightly
more than expected in January, helping to give the loonie some
    Canadian government bond prices were mostly lower across the
maturity curve, though the two-year was unchanged to
yield 1.075 percent. The benchmark 10-year was down
18 Canadian cents to yield 2.479 percent.

 (Editing by Peter Galloway)