CANADA FX DEBT-C$ weaker after PQ victory, BoC in focus
* C$ at C$0.9882, vs US$, or $1.0119 * Separatist PQ wins minority government, referendum unlikely * Bank of Canada expected to hold interest rate, focus on outlook By Solarina Ho TORONTO, Sept 5 (Reuters) - Canada's dollar was weaker against the greenback on Wednesday after the separatist Parti Quebecois resumed power in the French-speaking province of Quebec Tuesday evening, but market sentiment ahead of the Bank of Canada's rate decision and a key European Central Bank meeting overshadowed the election results. The Parti Quebecois edged ahead of the ruling Liberals to win a minority government, which effectively ruled out the possibility of another referendum to separate from Canada, but results were eclipsed by a masked gunman who killed one person inside the Montreal theater where the PQ was celebrating its narrow victory. "Having the PQ minority in place does bode well, have better implications in terms of the Canadian assets, the Canadian dollar, some of the bonds," said Mazen Issa, macro strategist with TD Securities, adding the currency was muted following the election. "Heading into the election, (the minority result) was already built in, that was the expectation. Now that we've actually had that result...the Canadian dollar movement, it probably has less to do with that than broader market sentiment." At 7:42, the Canadian dollar stood at C$0.9882, versus the U.S. dollar, or $1.0119, weaker than Tuesday's North American finish at C$0.9858, or $1.0144. Later on Wednesday, the Bank of Canada will be announcing its next interest rate decision. The central bank is expected to leave interest rates unchanged, so investors will be focused on whether Governor Mark Carney will change the bank's recent message that interest rates need to rise. Canadian government bonds were mixed, with the two-year bond climbing half a Canadian cent to yield 1.115 percent. The benchmark 10-year bond price was down 2 Canadian cents, to yield 1.740.
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