3 Min Read
* C$ ticks higher at C$1.0662 to U.S. dollar
* Bank of Canada Governor Carney's comments help lift C$
* Steady oil price offers support
* Bond prices higher across curve (Adds details, quote)
By Jennifer Kwan
TORONTO, Oct 27 (Reuters) - Canada's dollar was slightly higher against the U.S. currency on Tuesday afternoon as the market took heart from comments by Bank of Canada Governor Mark Carney.
The currency climbed as high as C$1.0627 to the U.S. dollar, or 94.10 U.S. cents, reversing course after hitting a near three-week low overnight on the lingering impact of last week's warning by the Bank of Canada about the dangers a high-value Canadian dollar presents to economic growth.
But Carney, appearing before the House of Commons finance committee on Tuesday, appeared to temper some of the bank's comments about an appreciating currency, said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
"The one comment that stands out for me is he said the ramifications of a stronger Canadian dollar can have both positive and negative aspects. That's taken as a little more neutral," Askari said.
Carney also said on Tuesday that central bank intervention in the foreign exchange market usually does not work without complementary policy moves. [ID:nN27247576]
"The fact that he basically said that direct intervention could only be used in addition to other tools says the likelihood of a purely FX intervention is unlikely," Askari said.
"What it might have done was have the comfortable sellers of the Canadian dollar sort of slow down a little bit," he added.
At 1:44 p.m. (1744 GMT), the Canadian unit was at C$1.0662 to the U.S. dollar, or 93.79 U.S. cents, slightly higher than C$1.0670 to the U.S. dollar, or 93.72 U.S. cents, at Monday's close.
A fairly steady commodity backdrop helped the currency hang on to gains. [O/R] [GOL/] Commodity prices often influence the Canadian dollar's direction because commodities make up a large porton of Canada's exports.
Canadian bond prices were higher across the curve alongside the bigger U.S. Treasury market following a relatively successful U.S. two-year note auction, said Mark Chandler, fixed income strategist at RBC Capital Markets. [US/]
"There was some trepidation about how well the relatively hefty auctions in the U.S. would be received," he said. He noted that softer U.S. economic data also pressured yields. [ID:nN27236301]
The two-year bond CA2YT=RR rose nine Canadian cents to C$99.50 to yield 1.494 percent, while the 10-year bond CA10YT=RR gained 40 Canadian cents to C$102.10 to yield 3.490 percent. (Reporting by Jennifer Kwan; editing by Peter Galloway)