CANADA FX DEBT-C$ jumps to 6-week high, bonds dip before BoC

Tue Mar 2, 2010 8:37am EST
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* C$ jumps to 96.57 U.S. cents, hits six-week high

* Bonds hold lower

* Bank of Canada rate announcement at 9 a.m.

By Ka Yan Ng

TORONTO, March 2 (Reuters) - Canada's currency surged to a six-week high against the U.S. dollar on Tuesday, extending gains from Monday's firm economic growth figures, and ahead of a key Bank of Canada rate announcement.

Government bonds held lower as market players priced in sooner-than-expected rate hikes.

The Bank of Canada's policy announcement, due at 9 a.m. (1400 GMT), is widely expected to result in no change in rates but market players are watching for a change in tone, particularly after Canada's fourth-quarter economic growth handily beat market, and even the central bank's, estimates. [ID:nN25256606] [ID:nN25112645] CABOCR=ECI

That had fueled talk that the Bank of Canada could raise interest rates sooner than it had planned. The central bank has conditionally pledged to keep rates low until the end of June.

"The Canadian dollar is riding a wave of strength from yesterday's GDP and market expectations that (Bank of Canada Governor Mark) Carney may announce some sort of shift in their commitment to keep rates on hold," said John Curran, senior vice president at CanadianForex, a commercial foreign exchange dealing firm.   Continued...