CANADA FX DEBT-C$ steady as Bank of Canada in focus, U.S. on holiday

Mon Jan 19, 2015 10:03am EST
 
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* Canadian dollar at C$1.1974 or 83.51 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Jan 19 (Reuters) - The Canadian dollar was steady
against the U.S. dollar on Monday with U.S. markets closed for
the Martin Luther King Jr. holiday while some investors were
sidelined awaiting release of the Bank of Canada's quarterly
Monetary Policy Report on Wednesday.
    The bank is set to deliver its latest interest rate decision
along with the report, which will provide growth forecasts that
many expect will be revised lower, driven in part by cheap
crude. Oil prices have fallen by about half since last June on
soaring output and slowing demand.
    The central bank has said the net impact of oil will be
negative for Canada, a major producer of the commodity.
    "I think (Bank of Canada Deputy Governor Timothy) Lane laid
the framework in talking about oil prices staying low for a 
significant period of time," said Don Mikolich, executive
director, foreign exchange sales at CIBC World Markets. CIBC
does not expect the bank to raise rates until the first quarter
of next year.
    Job cuts announced last week by Target Corp, Sony Corp,
Suncor Energy and Bombardier Inc will likely weigh on the
outlook as well, Mikolich said.
    "The market seems to be having a very dovish outlook to it.
It's really going to weigh on the Canadian dollar in terms of
opportunities to see much material appreciation," he said.
    At 9:33 a.m. (1433 GMT), the Canadian dollar was
trading at C$1.1974 to the greenback, or 83.51 U.S. cents,
little changed from Friday's close of C$1.1968, or 83.56 U.S.
cents.
    Last week, the currency broke through the C$1.20, a level
some forecasters had not expected until later this year.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 4 Canadian cents
to yield 0.855 percent and the benchmark 10-year 
rising 25 Canadian cents to yield 1.512 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)