CANADA FX DEBT-C$ steady post-Fed after flirting with 3-mth highs

Wed Apr 29, 2015 5:00pm EDT
 
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(Updates with fresh details, strategist comment, closing
figures)
    * Canadian dollar at C$1.2023 or 83.17 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, April 29 (Reuters) - The Canadian dollar held
steady against its U.S. counterpart on Wednesday, after broad
intraday swings that came following weak U.S. growth data and an
economic outlook downgrade from the U.S. Federal Reserve that
was not as negative as anticipated.
    The Canadian dollar had reached its strongest level since
before a surprise January rate cut, after data showed the U.S.
economy barely grew during the first quarter, expanding at an
annual rate of just 0.2 percent, far short of the 1 percent
economists had been forecasting. 
    The greenback, which slumped to a nine-week low after the
GDP data, trimmed its losses, however, after the Fed released
its monetary policy statement following a two-day meeting. 
    "The initial takeaway from the FOMC meeting was that it was
not as dire as the expectations would have us believe," said
Jack Spitz, managing director of foreign exchange at National
Bank Financial.
    "The Fed is of the view that much of the data misses have
been the result of transitory effects, predominantly weather
related, and it continues to remain somewhat more optimistic on
growth expectations into the second half of the year."
    Market expectation for when the central bank will hike
interest rates again, the first time since June 2006, remains
sometime in the second half of the year.
    The Canadian dollar finished the session at
C$1.2023 versus the greenback, or 83.17 U.S. cents, stronger
than the Bank of Canada's official close of C$1.2030, or 83.13
U.S. cents.
    At one point after the GDP data, the currency rallied to
C$1.1945, its strongest level since Jan. 20, just before the
Bank of Canada issued a surprise 25 basis point interest rate
cut. Its weakest level of the session was C$1.2074.
    In Canada, producer prices unexpectedly increased, rising
0.3 percent in March from February, bolstered by higher prices
for energy and petroleum products. Economists had forecast a 0.1
percent decrease. 
    Also lending some support to the loonie were crude prices
that hit 2015 highs on data that showed an oil glut may be
starting to ease.  
    Canadian economic growth figures for February are due on
Thursday.
    Government bond prices were mostly lower across the maturity
curve, with the two-year price down half a Canadian
cents to yield 0.681 percent and the benchmark 10-year
 falling 29 Canadian cents to yield 1.587 percent.
    The Canada-U.S. two-year bond spread was 11.8 basis points,
while the 10-year spread was -45.7 basis points.
    

 (Reporting by Solarina Ho; Editing by Nick Zieminski and Ted
Botha)