CANADA FX DEBT-C$ sticks to range with inflation data in view
* Canadian dollar at C$1.0738 or 93.13 U.S. cents * Bond prices higher across maturity curve By Leah Schnurr TORONTO, July 17 (Reuters) - The Canadian dollar was little changed against the greenback on Thursday, consolidating ahead of the release of domestic inflation data on Friday and following an as-expected message from the Bank of Canada on Wednesday. The central bank shrugged off a recent rise in inflation as temporary and warned that the economy does not yet have enough steam to grow without help. The bank also stuck to its neutral policy stance, saying interest rate cuts are just as possible as rate hikes. Analysts said the bank's statement and subsequent remarks at a news conference were largely in line with what the market had expected, and that focus was turning to Friday's consumer price index report for June. Annualized inflation is forecast to hold at 2.3 percent for the month and core inflation to be at 1.7 percent. "There is not much incentive for the market to push the loonie much higher today, especially ahead of CPI tomorrow," said Martin Schwerdtfeger, FX strategist at TD Securities in Toronto. The loonie rallied through much of June, partly due to the recent surge in inflation as investors speculated about how the central bank would address the rise after warning repeatedly about a low inflation environment. But the Canadian dollar lost momentum last week, pulling back after data showed the economy had unexpectedly lost jobs. That left the loonie positioned for the Bank of Canada's well-anticipated message on Wednesday, Schwerdtfeger said. "The move higher that U.S. dollar-Canadian dollar experienced in the previous week perhaps had already factored in what the market was expecting fully from the Bank of Canada," he said. "So after the fact, there was no major new development and that is why today we are seeing range trading." The Canadian dollar was at C$1.0738 to the greenback, or 93.13 U.S. cents, slightly stronger than Thursday's close of C$1.0746, or 93.06 U.S. cents. TD Securities forecasts a small decline in both overall and core inflation for June, while an upside surprise "might trigger some in the market to start wondering again whether the bank is a bit behind," which could be a headwind for the currency pairing, Schwerdtfeger said. Canadian government bond prices were higher across the maturity curve, with the two-year up 2-1/2 Canadian cents to yield 1.077 percent and the benchmark 10-year up 25 Canadian cents to yield 2.172 percent. (Editing by Peter Galloway)
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