CANADA FX DEBT-C$ little changed in thin markets; busy data week in focus

Mon May 25, 2015 5:09pm EDT
 
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(Updates with fresh details on week ahead, strategist comment,
closing figures)
    * Canadian dollar at C$1.2313 or 81.21 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, May 25 (Reuters) - The Canadian dollar finished
little changed against the greenback on Monday in very thin
holiday trading and ahead of a busy week in North American
economic news.
    Investors are focused on the Bank of Canada's interest rate
decision on Wednesday and first-quarter economic growth data on
Friday, as well as a jam-packed U.S. data calendar that could
have implications for the U.S. Federal Reserve.
    "For the Bank of Canada ... There's definitely risk, but I'd
say expectations are pretty firmly for a status quo statement,"
said Greg Moore, senior currency strategist at RBC Capital
Markets.
    Moore noted that Governor Stephen Poloz already telegraphed
in a speech last week that the Bank's position has not changed
much since the last meeting and monetary policy report in April.
    "Even if it's a disappointment, which is what RBC expects,
it won't be far off of the flat growth that the Bank of Canada
was calling for. They've already said they're looking through
whatever happens in Q1 to what happens to Q2," Moore said.
    The loonie's pause comes after a retreat to a five-week low
on Friday and with U.S. and many European markets closed for
various holidays.
    The Canadian dollar, which was weaker than all of
its key currency counterparts, was trading at C$1.2313 to the
greenback, or 81.21 U.S. cents, negligibly weaker than the Bank
of Canada's official close of C$1.2301, or 81.29 U.S. cents on
Friday.
    The currency traded within a tight range, between C$1.2276
and C$1.2319.
    Despite the upcoming Canadian economic events on the
calendar, the loonie will likely take much of its direction from
greenback action on U.S. economic data, which includes durable
goods, consumer confidence and services data on Tuesday and
first quarter GDP data later in the week. 
    "You would expect some implication from the Canadian
developments but I think the real developments will be out of
the U.S.," said Moore.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price up 1.5
Canadian cents to yield 0.673 percent and the benchmark 10-year
 falling 9 Canadian cents to yield 1.780 percent.
    The Canada-U.S. two-year bond spread was 5.5 basis points,
while the 10-year spread was -43.5 basis points.

 (Reporting by Solarina Ho; Editing by Lisa Von Ahn and Diane
Craft)