CANADA FX DEBT-Canadian dollar weaker ahead of central bank rate decision

Tue Sep 2, 2014 4:48pm EDT
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* Canadian dollar at C$1.0930, or 91.49 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details, quote, updates prices)
    By Leah Schnurr
    TORONTO, Sept 2 (Reuters) - The Canadian dollar weakened
against the greenback on Tuesday to its lowest level in nearly a
week, hurt by broad strength in its U.S. counterpart, while
investors looked ahead to a monetary policy statement from the
Bank of Canada due on Wednesday.
    The decline saw the loonie unwind some of last week's rally
and took it through the closely watched C$1.09 level. The
Canadian dollar rose 0.6 percent last week, lifted by a number
of factors including fund flow speculation and month-end
    "Given the swings we had last week, we're just hoping for a
little bit of calm in the markets today to regroup and
regather," said Shaun Osborne, chief currency strategist at TD
Securities in Toronto.
    Weaker oil prices also weighed on the loonie, even though
the correlation between the currency and commodities is not
strong at the moment, Osborne said.
    "We're essentially just range trading and consolidating at
the moment," he said.
    The Canadian dollar ended the North American
session at C$1.0930 to the greenback, or 91.49 U.S. cents,
compared to Friday's official close of C$1.0873, or 91.97 U.S.
cents from the Bank of Canada. Many market participants were
away on Monday for the Labor Day holiday.
    While Canada's central bank is widely expected on Wednesday
to hold its overnight interest rate at 1 percent, where it has
been since 2010, investors will be parsing the tone of the
policy statement. The central bank is expected to stick to a
cautious message. 
    "We're very likely to get another balanced statement" that
will temper an improvement in U.S. growth with expectations
Canadian inflation will drift lower, said Scott Smith, senior
market analyst at Cambridge Mercantile Group in Calgary.
    "They'll be able to remain accommodative until growth really
picks up on a sustainable basis," he said. 
    Canada's jobs report for August will be the other main
domestic economic event this week. Forecasts are for the pace of
jobs growth to remain sluggish with 10,000 positions created
last month.
    The report could get additional scrutiny coming on the heels
of the July report, which had to be restated by Statistics
Canada due to an error. 
    Canadian government bond prices were lower across the
maturity curve on Tuesday, with the two-year down
3-1/2 Canadian cents to yield 1.125 percent and the benchmark
10-year down 85 Canadian cents to yield 2.092

 (Editing by Paul Simao)