CANADA FX DEBT-C$ little changed, awaits Bank of Canada

Wed Apr 18, 2012 8:29am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ at C$0.9906 vs US$, or $1.0095
    * Market awaits BoC Monetary Policy Report
    * Bonds softer across curve

    By Jennifer Kwan	
    TORONTO, April 18 (Reuters) - Canada's dollar was a tad
lower against its U.S. counterpart on Wednesday, guided by a
softer trend in global equity markets, as traders awaited more
comments by the Bank of Canada after it signaled the day before
it was closer to raising interest rates.	
    With little direction from flat to lower prices for global
stocks, oil and gold, the currency was locked in a tight trading
range of C$0.9915 and C$0.9882 against the greenback.	
    At around 8:05 a.m. (1205 GMT), the Canadian dollar 
was at C$0.9906 against the U.S. dollar, or $1.0095, down
slightly from Tuesday's finish at C$0.9902 against the U.S.
dollar, or $1.0099.	
    Charles St-Arnaud, economist and currency strategist at
Nomura Securities in New York, said the currency would likely
remain flat until the release of the Bank of Canada's Monetary
Policy Report (MPR), a quarterly report outlining the bank's
base-case projection for inflation and growth in the Canadian
economy, as well as its assessment of risks.	
    "Most traders are waiting for more precise information from
the Bank of Canada later in the MPR and in the subsequent press
conference," said St-Arnaud of the report that is due to be
released at 10:30 a.m. (1430 GMT).	
    "Everyone will be looking at hints of how quickly they're
ready to hike," he said.	
    On Tuesday, the Canadian dollar was a leading gainer among
major currencies, soaring to a near one-month high and notching
its best gain this year after the Bank of Canada kept rates
unchanged at 1 percent, as expected, but signaled that it was
starting to think more seriously about tightening monetary
    The surprisingly hawkish stance by the central prompted a
quarter of the country's primary dealers to pull forward their
forecasts for an interest rate hike, according to a Reuters
poll, with the central bank now expected to tighten policy early
next year. 	
    "The opinions diverge quite a lot," said St-Arnaud. "With
the door open now to a rate hike, if we have positive data in
Canada and generally good data also globally they could go as
soon as June or July, if needed."	
    On the other side, there are economists that say the BoC
seems to be ready to hike, but it won't be until 2013, he added.	
    The median forecast for the timing of the next rate increase
is being pushed up to the first quarter of 2013, according to
the poll. 	
    Canadian government bond prices were mostly lower across the
curve. The yield on the two-year bond, which is
especially sensitive to Bank of Canada interest rate moves, rose
to 1.354 percent. The benchmark 10-year bond fell 7
Canadian cents to yield 2.077 percent.