CANADA FX DEBT-C$ little changed amid weak data, rate hike doubt

Thu Aug 23, 2012 8:57am EDT
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* C$ little changed at C$0.9916 vs US$, or $1.0085
    * Bank of Canada's hawkish tone meets skepticism
    * US dollar weakens on possible stimulus by Fed
    * Bond prices edge lower

    By Andrea Hopkins
    TORONTO, Aug 23 (Reuters) - The Canadian dollar was little
changed near one-week lows on Thursday, failing to gain traction
despite a move lower by the U.S. dollar on speculation about
another dose of stimulus by the Federal Reserve.
    While most currencies gained against the U.S. dollar
overnight, the Canadian dollar was mostly flat, weighed by a
string of weak economic data and market skepticism that the Bank
of Canada can really deliver on its hawkish sentiment.
    "It seems kind of unbelievable that the Bank of Canada is
going to be raising rates anytime soon -- in fact I think the
market is pricing in only a 12 percent change of a move by year
end," said David Bradley, director of foreign exchange trading
at Scotiabank.
    "If you look at the last three or four economic indicators,
they've been quite soft -- retail sales, CPI, unemployment -- so
that is preventing further Canadian dollar strength as well."
    Bank of Canada Governor Mark Carney in remarks on Wednesday 
repeated similar language used last month when keeping rates
unchanged, saying "some modest withdrawal of the present
considerable monetary policy stimulus" might become appropriate.
    Signals from the U.S. Federal Reserve that another dose of
stimulus measures could come "fairly soon" lifted global shares
on Thursday and pushed the U.S. dollar to a two-month low,
outweighing poor economic data from China and Europe.
    But Canada's currency did not follow other currencies
higher. The Canadian dollar was trading at C$0.9916
versus the U.S. dollar, or $1.0085, little changed from
Wednesday's North American session close at C$0.9914, or
    Bradley said the currency would likely trade in a one cent
range between C$0.9850 and C$0.9950 in the near term and in an
event tighter range for the day.
    "We're probably going to see demand for dollars near the
overnight lows at C$0.9880-C$0.9885, so that's going to limit
the downside, and I would think the topside is capped at about
C$0.9915-C$0.9920 for the time being," Bradley said.
    Canadian bond prices were mostly lower across the curve,
with the two-year bond losing 15 Canadian cents to
yield 1.117 percent and the benchmark 10-year bond 
trimming 10 Canadian cents to yield 1.850 percent.