CANADA FX DEBT-C$ weaker, unchanged by Bank of Canada speech

Tue Sep 20, 2011 2:19pm EDT
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   * C$0.9912 vs US$, or $1.0089
 * Carney speech as expected, no dollar reaction
 * Focus still on Europe, Fed
 * Bond prices lower
 By Andrea Hopkins
 TORONTO, Sept 20 (Reuters) - The Canadian dollar remained
slightly weaker against its U.S. counterpart on Tuesday
afternoon, weighed down by worries over Europe and unaffected
by a dovish speech by the Bank of Canada chief.
 The euro edged slightly higher as investors stayed cautious
on the currency and as Greece's ability to avoid default was
still a wild card. [FRX]
 But global stock markets rose and crude oil jumped on
expectations the U.S. Federal Reserve will act to boost the
U.S. economy as it opened a two-day policy meeting, and as
investors shrugged off Italy's credit downgrade and other sour
news. [MKTS/GLOB]
 A dovish speech by Bank of Canada Governor Mark Carney was
largely as expected and had little impact on Canadian markets.
 "We are still very much in a range and I think that just
reflects the fact that investors are still primarily concerned
with events in Europe and that is the most important policy
implication even on Canada, at least through financial market
channels," said David Tulk, chief Canada macro strategist at TD
 "From that perspective it would take a lot for Governor
Carney to move the Canadian dollar, just because everyone is so
uniquely focused on Europe today and looking ahead to the
Federal Reserve tomorrow."
 The Canadian dollar held steady at weaker levels against
its U.S. counterpart after Carney's speech and news
 At 2:01 p.m. (1901 GMT), the Canadian dollar CAD=D4 stood
at C$0.9912 to the U.S. dollar, or $1.0089 U.S. cents, down
slightly from Monday's North American session close of C$0.9897
to the U.S. dollar, or $1.0104.
 Carney said external shocks are adding downside risks to
the Canadian economy, with euro zone fiscal funding challenges
affecting near-term confidence. [ID:nS1E78J116].
 The tone of the speech matched the cautious stance the bank
has taken lately.
 "He's basically preaching the same type of view that the
international outlook is quite bleak and conditions are
slightly more constructive within Canada, but ultimately there
is only a limited window in which Canada can outperform its
international peers," Tulk said.
 "Our view is that they would prefer to keep the policy rate
lower for longer and let fiscal stimulus provide any support in
the event the economy needs it."
 Bond prices were lower across the curve.
 The two-year bond CA2YT=RR was down 2.5 Canadian cents to
yield 0.946 percent, while the 10-year bond CA10YT=RR was
down 20 Canadian cents to yield 2.207 percent.
 (Editing by Peter Galloway)