CANADA FX DEBT-C$ remains outperformer post-data, Bank of Canada

Mon Apr 20, 2015 4:54pm EDT
 
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(Updates with new details, market reaction, comment from
Knightsbridge)
    * Canadian dollar at C$1.2230 or 81.77 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, April 20 (Reuters) - The Canadian dollar held
steady against a firmer U.S. dollar on Monday and also remained
stronger against all other major currencies after last week's
rally, with higher crude prices offering additional support.
    The loonie touched its strongest level since January on
Friday after better-than-forecast domestic data and a more
optimistic tone from the Bank of Canada tempered any expectation
another rate hike was on the horizon.
    "It's found a nice home in terms of where it will be for the
rest of this week," said Rahim Madhavji, president at
Knightsbridge Foreign Exchange, noting the lack of top-tier
economic data this week.
    "For the most part, the Canadian dollar has had a strong
rally based off of some of the inflation data and comments from
the Bank of Canada. A pretty strong catalyst for the CAD that
has really eliminated severe downside risk."
    The Canadian dollar ended the session at C$1.2230
to the greenback, or 81.77 U.S. cents, little changed from the
Bank of Canada's Friday official close of C$1.2228, or 81.78
U.S. cents.
    The loonie had strengthened earlier in the session,
particularly after Bank of Canada Governor Stephen Poloz
reiterated his view that January's surprise interest-rate cut
appeared to have been sufficient insurance to buffer the economy
against plunging crude prices. 
    The price of oil, a major export for Canada, rose on Monday
following a drop in stockpiles at the delivery point for U.S.
crude, a move that outweighed pressure from Saudi Arabia, the
world's top crude exporter, which is expected to keep production
at near record levels. 
    U.S. crude prices were up 1.09 percent to $56.35,
while Brent crude was unchanged at $63.45.
    "That's been a boost for the Canadian dollar," said
Madhavji, adding that he expected the currency to be rangebound
between C$1.21 and C$1.25 over the coming weeks.
    Canadian government bond prices were mixed across the
maturity curve, with the longer-term maturities falling. The
two-year price was down 2.5 Canadian cents to yield
0.642 percent and the benchmark 10-year fell 19
Canadian cents to yield 1.425 percent.
    The Canada-U.S. two-year bond spread was 11.8 basis points,
while the 10-year spread was -45.8 basis points.

 (Reporting by Solarina Ho; Editing by W Simon and Ted Botha)