CANADA FX DEBT-C$ edges up in range trading, bonds firm

Mon Aug 30, 2010 9:04am EDT
 
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 * C$ edges up to 95.15 U.S. cents
 * Bonds edge higher as stocks point lower
 * Canada current account gap widens, producer prices up
 TORONTO, Aug 30 (Reuters) - The Canadian dollar was a touch
firmer and range-bound against the U.S. dollar on Monday,
unmoved by the morning's domestic data as markets digested news
that the Bank of Japan stopped short of aggressive monetary
easing measures.
 The Bank of Japan at an emergency meeting chose to expand a
fund supply scheme, which investors took as a symbolic move
that would do little to halt the yen's climb. [ID:nTOE67S01V]
 "That disappointment is now being reflected in equity
markets in Europe and Dow futures, which are all pointing down,
(though) markets are somewhat thinned out," said Jack Spitz,
managing director of foreign exchange at National Bank
Financial. He put the day's trading range between C$1.0450 and
C$1.0550.
 The Canadian dollar managed to stay just above Friday's
close, as data showed Canadian producer prices edged up 0.1
percent in July from June, below expectations. The current
account deficit widened more than expected in the second
quarter. [ID:nN30434611] [ID:nN30257696]
 At 8:40 a.m. (1240 GMT), the Canadian dollar was at
C$1.0510 to the U.S. dollar, or 95.15 U.S. cents, up from
C$1.0524 to the U.S. dollar, or 95.02 U.S. cents, at Friday's
close.
 Tuesday's release of Canada's second-quarter gross domestic
product data may help seal interest rate expectations for the
Bank of Canada's Sept. 8 policy meeting.
 After bolting out of the gates in the first quarter with
growth of 6.1 percent, the March-June measure of economic
expansion is likely to be decidedly slower, at less than half
the pace. [ID:nN2750745]
 Economists surveyed by Reuters forecast on average 2.5
percent annualized growth in second-quarter GDP.
 While Canada's primary securities dealers forecast the
central bank will raise rates by a quarter-point, market
pricing is less certain. Markets are leaning towards keeping
the key rate unchanged, as measured by a Reuters calculation of
yields on overnight index swaps on Monday. BOCWATCH
 Friday's U.S. payrolls report may also sway expectations,
given the Bank of Canada has suggested further interest rate
hikes would be weighed against domestic and global economic
developments.
 "Tomorrow's focus is on GDP and is important in terms of
how much of a slide there's been since Q1," said Spitz.
 "The Bank of Canada is widely expected to once again
increase interest rates unless the numbers tomorrow and
Friday's payroll numbers disappoint."
 The mixed sentiment on Canadian interest rate expectations
and a slower world growth profile have kept government bond
prices supported in recent weeks.
 On Monday, a softer tone to North American stock index
futures also supported bond prices.
 The two-year bond CA2YT=RR gained 6 Canadian cents to
yield 1.281 percent, while the 10-year bond CA10YT=RR pushed
up 44 Canadian cents to yield 2.824 percent.
  (Reporting by Ka Yan Ng; Editing by Padraic Cassidy)