CANADA FX DEBT-C$ weaker after short-lived boost from inflation data

Wed Mar 27, 2013 9:30am EDT
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* C$ at C$1.0166 vs US$, or 98.37 U.S. cents
    * Inflation jumps in Feb, but seen unlikely to prompt rate

    By Alastair Sharp
    TORONTO, March 27 (Reuters) - The Canadian dollar was weaker
on Wednesday following a brief spike on data showing domestic
prices rose further than expected, but not enough to convince
economists that the Bank of Canada would shift back into
rate-hiking mode.
    Canada's annual inflation rate jumped to 1.2 percent in
February from a three-year-low of 0.5 percent in January on
higher gas and autos prices, Statistics Canada data indicated.
    The reading was higher than economists had predicted, but
still below the central bank's target. 
    "There will be a short-lived pop in the currency, but I
don't think it is going to make a fundamental change in the
bank's outlook," said Doug Porter, chief economist at BMO
Capital Markets. 
    "I think talk about the bank cutting is going to brushed
aside now but I don't think this advances the timetable on Bank
of Canada rate hikes," he said.
    At 9:17 a.m. (1317 GMT) the Canadian dollar had
given up early gains to trade at C$1.0166 to the greenback, or
98.37 U.S. cents, compared with C$1.0164, or 98.39 U.S. cents,
at Tuesday's North American close.
    The currency had hit its strongest level since Feb. 22 on
    The price of government bonds was higher across the curve,
with the two-year bond up 2 Canadian cents to yield
0.997 percent, while the benchmark 10-year bond rose
35 Canadian cents to yield 1.779 percent.