CANADA FX DEBT-Canada dollar edges upward after BoC financial risk report

Thu Jun 12, 2014 4:39pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Canadian dollar at C$1.0855, or 92.12 U.S. cents
    * Strengthens after Bank of Canada risk report, eases on
inflation comments
    * Bond prices rise across maturity curve

 (Updates to close)
    By Andrea Hopkins
    TORONTO, June 12 (Reuters) - The Canadian dollar firmed
slightly against the U.S. dollar on Thursday after the Bank of
Canada said risks to financial stability were largely unchanged,
but the currency gave back some gains after Governor Stephen
Poloz said inflation pressures remained low.
    In its semiannual report on financial stability, the central
bank said Canada's financial system is robust despite lingering
concern about a stretched housing market and low inflation,
while external risks from China have increased.
    But the bank's governor expressed persisting anxiety over
low inflation and retained a dovish tone on monetary policy,
preventing the Canadian dollar from gaining more than a few
    "The currency did strengthen a little bit around the time of
the report, but really he didn't say anything new at all, just
that risks were unchanged in aggregate," said Mark Chandler,
head of Canadian fixed-income and currency strategy at Royal
Bank of Canada.
    "(During) the press conference, where he started talking
more about monetary policy, you actually saw a bit of unwind in
strength in the Canadian dollar as he underlined that inflation
risks were still quite low."
    The Canadian dollar ended the North American
session at C$1.0855 against the greenback, or 92.12 U.S. cents,
slightly stronger than Wednesday's close at C$1.0867 per
greenback, or 92.02 U.S. cents.
    The U.S. dollar slipped for a second straight session
against a basket of major currencies after U.S. retail sales
data missed expectations and weekly jobless claims rose, curbing
speculation of a hawkish stance from the Federal Reserve. 
    Chandler said the Canadian dollar was likely to remain in a
fairly tight range until next week, when all eyes will be on the
Fed's two-day policy-setting meeting. The Fed's Open Market
Committee will release its policy statement and forecasts, and
hold a news conference, on Wednesday.
    Canadian government bond prices were higher across the
maturity curve, with the two-year edging up to yield
1.078 percent and the benchmark 10-year bond rising
33 Canadian cents to yield 2.311 percent.

 (Reporting by Andrea Hopkins; editing by G Crosse and Tom