CANADA FX DEBT-C$ gains on weak US$, at strongest since Jan rate cut

Tue Apr 28, 2015 11:41am EDT
 
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* Canadian dollar at C$1.2030, or 83.13 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, April 28 (Reuters) - The Canadian dollar rose
against a slumping greenback on Tuesday, hitting its strongest
level since the Bank of Canada shocked markets with a rate cut
in January.
    The U.S. dollar hit an eight-week low as the Federal Reserve
meets to set its latest monetary policy. Investors are hoping
the central bank will provide clues on when it will raise
interest rates.
    The U.S. economy has shown signs of slowing in a run of
lackluster first-quarter economic data, pushing expectations for
a rate hike toward the second half of 2015.
    On Tuesday, a report on U.S. consumer confidence showed a
slump in April. 
    Assuming Wednesday's Fed statement brings no major change in
interest rate expectations, "we would be looking for the (U.S.)
dollar-positive trend to reassert itself fairly quickly," said
Adam Cole, global head of FX strategy at Royal Bank of Canada.
    Domestically, Bank of Canada Governor Stephen Poloz said the
negative effects of the sharp fall in oil prices were hitting
Canada faster than expected, but the shock did not appear to be
larger than anticipated.  
    At 11:05 a.m. EDT (1505 GMT), the Canadian dollar 
was at C$1.2030 to the greenback, or 83.13 U.S. cents, stronger
than the Bank of Canada's official close on Monday of C$1.2101,
or 82.64 U.S. cents. The loonie has traded between C$1.2021 and
C$1.2116 on Tuesday.
    Looking ahead, U.S. first-quarter GDP data is due at 8:30
a.m. EDT on Wednesday, followed by the Fed statement at 2:00
p.m. 
    U.S. crude prices were flat at around $57, while
Brent crude was barely lower at $64.80. The weaker U.S.
dollar has provided some support for oil, with prices holding
near 2015 highs. 
    Canadian government bond prices were mixed across the
maturity curve, with longer-term debt declining. The two-year
 price was down 1.5 Canadian cents to yield 0.655
percent, and the benchmark 10-year fell 59 Canadian
cents to yield 1.522 percent.
    The Canada-U.S. two-year bond spread was 9.6 basis points,
while the 10-year spread was -43.1.

 (Reporting by Solarina Ho and Alastair Sharp; Editing by Peter
Galloway and Lisa Von Ahn)