CANADA FX DEBT-C$ steady with U.S. markets closed

Mon May 26, 2014 9:51am EDT
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* Canadian dollar at C$1.0864 or 92.05 U.S. cents
    * Bond prices mostly higher across the maturity curve

    By Leah Schnurr
    TORONTO, May 26 (Reuters) - The Canadian dollar was little
changed on Monday and was expected to stay within its recent
trading range in a session made quiet by the U.S. Memorial Day
    So far in May, the Canadian dollar has largely moved
sideways as analysts weigh generally improving economic data
against the Bank of Canada's neutral policy stance. The central
bank shifted away from its hawkish bias last October, pressuring
the loonie.
    Analysts say the currency could be hemmed in until there is
either a change in the Bank of Canada's tone or a breakout in
the U.S. dollar as economic recovery south of the border takes
hold. Market focus is starting to turn to the Bank of Canada's
next policy statement, which will be issued next week.
    Volumes on Monday were muted with U.S. markets closed for
Memorial Day, while markets in London were also closed.
    "We're definitely looking at some icy cold trading
conditions with London and New York being closed today," said
Scott Smith, senior market analyst at Cambridge Mercantile Group
in Calgary.
    The Canadian dollar was at C$1.0864 to the
greenback, or 92.05 U.S. cents, slightly stronger than Friday's
close of C$1.0870, or 92.00 U.S. cents. 
    The loonie is likely to trade between C$1.09 and C$1.0830 to
C$1.0840 for the session, Smith said.
    The euro was little changed against the Canadian dollar as
investors took in the results of European Parliament elections.
While Euroskeptic nationalists racked up victories in France and
Britain, pro-European forces held firm in Germany and Italy.
    "Right now, we're not a point where we're going to see the
EU blow up or there's going to be any major changes in the
extremely near term," Smith said. "The one surprising thing is
that the surge in anti-EU parties acts as a warning shot to the
status quo in the European zone right now."
    The euro was trading at C$1.4815.
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year up 0.3 of a
Canadian cent to yield 1.052 percent and the benchmark 10-year
 up 3 Canadian cents to yield 2.303 percent.

 (Editing by Peter Galloway)