CANADA FX DEBT-C$ flat as BoC maintains tone on currency

Thu Oct 22, 2009 11:39am EDT
 
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 * C$ rallies as high as C$1.0450 to the U.S. dollar
 * Turnaround follows Bank of Canada's MPR
 * Bond prices mostly flat across the curve
 (Recasts)
 By Frank Pingue
 TORONTO, Oct 22 (Reuters) - Canada's currency pared earlier
losses and was flat versus the U.S. dollar on Thursday morning
as the Bank of Canada's Monetary Policy Report did not alter
the tone the bank delivered earlier this week when it said it
was concerned about the strong Canadian dollar.
 Still, the currency did not stage a significant rally as
traders lost their appetite for riskier assets after some
disappointing corporate earnings and instead piled into the
U.S. dollar.
 In its Monetary Policy Report, the Bank of Canada repeated
comments made early this week that a stronger Canadian dollar
would more than fully offset recent favorable economic
developments. [ID:nN22502163]
 Some market players had braced for the chance the central
bank would take a stronger stance against Canadian dollar
appreciation because it is crimping economic recovery.
 "What they said this morning had already been said so there
was no additional Canadian dollar-negative spin here," said
said Shaun Osborne, chief currency strategist at TD Securities.
"This week was still generally a sign that they are still very
concerned with the Canadian dollar."
 The Canadian dollar rose as high as C$1.0450 to the U.S.
dolalr, or 95.69 U.S. cents, after the MPR, from about C$1.0517
to the U.S. dollar, or 95.08 U.S. cents, before.
 At 11:10 a.m. (1510 GMT), the Canadian unit was at C$1.0463
to the U.S. dollar, or 95.57 U.S. cents, compared with C$1.0460
to the U.S. dollar, or 95.60 U.S. cents, at Wednesday's close.
 Keeping the currency from rallying further was a sour mood
on equity markets due to some disappointing corporate results
and Chinese data that showed the economy there rose 8.9 percent
in the third quarter, short of some of the more optimistic
predictions. [ID:nSP452724]
 Canadian bond prices pared some of their losses and were
mostly flat across the curve on Thursday morning.
 (Editing by Peter Galloway)