CANADA FX DEBT-C$ strengthens after Bank of Canada speech

Thu Mar 26, 2015 10:18am EDT
 
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* Canadian dollar at C$1.2462 or 80.24 U.S. cents
    * Poloz speech less dovish than some had expected
    * Bond prices mostly lower across the maturity curve

    By Andrea Hopkins
    TORONTO, March 26 (Reuters) - The Canadian dollar
strengthened against its U.S counterpart on Thursday after a
speech by Bank of Canada Governor Stephen Poloz in London was
viewed by the market as less dovish than expected.
     In remarks that underscored the possibility the central
bank will keep interest rates steady next month, Poloz said the
bank's quarter-point rate cut in January has bought it time to
examine the effects of cheaper oil on the economy of Canada, a
major oil producer. 
    Poloz also repeated the bank's view that the negative
effects of lower oil prices are beginning to appear and the
positive effects will take longer to emerge.
    "He was a little less dovish than perhaps people might have
thought and he's still sticking to the patience: wait for the
effects of the January rate cut to go through," said Mark
Chandler, head of Canadian fixed income and currency strategy at
Royal Bank of Canada.
    "So, relatively neutral so far. The fact that some had
thought dovish, that's what caused the currency to rally this
morning."
    At 10:00 a.m. EDT (1400 GMT), the Canadian dollar 
was at C$1.2462 to the greenback, or 80.24 U.S. cents, up from
Wednesday's North American session close of C$1.2517, or 79.89
U.S. cents.
    Investors remained focused on Poloz, who was set to take
questions from reporters in London later on Thursday.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down 14 Canadian
cents to yield 0.579 percent and the benchmark 10-year
 down 73 Canadian cents to yield 1.418 percent.

 (Reporting by Andrea Hopkins; Editing by Peter Galloway)