CANADA FX DEBT-C$ little changed ahead of BoC report

Thu Jan 21, 2010 9:26am EST
 
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  * Firms slightly to C$1.0467, or 95.54 U.S. cents
  * Bond prices mostly weaker
 By Claire Sibonney
 TORONTO, Jan 21 (Reuters) - The Canadian dollar was little
changed against the U.S. currency on Thursday, with traders
looking to a Bank of Canada report that is expected to reaffirm
expectations that rates will stay on hold until at least the
middle of this year.
 The Bank of Canada's Monetary Policy Report, due at 10:30
a.m. (1530 GMT) follows this week's rate decision statement and
unexpectedly weak inflation data that have dampened
expectations of early tightening by the Bank of Canada.
 "To a large extent we've already had some insight into what
the bank is thinking with the dovish bias that we had to the
policy statement earlier this week so I shouldn't expect to see
anything significantly new," said Shaun Osborne, chief currency
strategist at TD Securities.
 Osborne expects the recent sell-off in the Canadian dollar
to stabilize over the next couple days as the U.S. dollar
struggles to keep its upward momentum higher.
 The Canadian dollar hit a session low of C$1.0525, or 95.01
U.S. cents overnight amid broadbased U.S. dollar strength.
 The euro hit a five-month low against the dollar on
Thursday, weighed down by concerns over Greece and other
peripheral euro zone countries, and by data which pointed to
possible slower growth in the currency bloc. [FRX]
 "Just initial term, we may have run the course of this
sell-off in the Canadian dollar here, I think it's starting to
look a little bit undervalued," Osborne added.
 At 8:44 a.m., the Canadian dollar was at C$1.0467 to the
U.S. dollar, or 95.54 U.S. cents, compared with Wednesday's
finish at C$1.0470 to the U.S. dollar, or 95.51 U.S. cents.
 The currency firmed slightly after a report showed higher
sales of automotive products pushed Canadian wholesale trade up
by 2.5 percent in November from October, a leap that far
exceeded expectations and indicated the worst of the recession
was over. [ID:nN21208437]
 Canadian government bond prices were mostly weaker,
mirroring losses in U.S. Treasuries, which dipped as the market
braced for details of upcoming U.S. auctions.
 The two-year bond CA2YT=RR fell 2.5 Canadian cents to
C$100.06 to yield 1.22 percent. But the 10-year bond
CA10YT=RR rose 3 Canadian cents to C$102.60 to yield 3.422
percent.
  (Reporting by Claire Sibonney; Editing by Jeffrey Hodgson)