CANADA FX DEBT-C$ little changed as investors look to Bank of Canada

Mon Oct 20, 2014 4:30pm EDT
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* Canadian dollar at C$1.1284 or 88.62 U.S. cents
    * Bond prices mostly higher across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, Oct 20 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday, supported by figures
showing an unexpected rise in domestic wholesale trade in
August, while investors were looking ahead to the Bank of
Canada's policy statement later this week.
    Markets globally were calmer than last week, when investors
fled to safe havens on worries about the outlook for the world
economy. Those concerns drove the Canadian dollar to a more than
five-year low but it has clawed back some gains since then.
    Data showed Canadian wholesale trade rose 0.2 percent in
August to the second-highest level ever and contrary to market
expectations for a decline of 0.2 percent. 
    The week's main event, however, will be the monetary policy
statement from the Bank of Canada due on Wednesday. The bank
will also update its economic forecasts and is widely expected
to hold its key interest rate at 1 percent, where it has been
for four years.
    The central bank is seen likely to keep sending a cautious
message, particularly in light of last week's market turmoil,
even after data last week showed inflation in September was at
the bank's 2 percent target. 
    "They'll be pointing to global growth concerns, sagging oil
prices, stock market volatility as reasons to maintain their
current dovish stance," said Don Mikolich, executive director of
foreign exchange sales at CIBC World Markets in Toronto.
    "I don't know if the market will necessarily react too
negatively to it. We've come to expect that tone a bit, and
certainly with the environment around it, it would seem
justified," Mikolich said.
    The Canadian dollar ended the North American
session at C$1.1284 to the greenback, or 88.62 U.S. cents,
slightly weaker than Friday's close of C$1.1277, or 88.68 U.S.
    The loonie fell as far as C$1.1385 last week, its lowest
since July 2009. The previous low for 2014 had been hit in
    The currency is likely to oscillate around the C$1.13 area
until the Bank of Canada statement is released, said Rahim
Madhavji, president at in Toronto. In the
meantime, the loonie is likely to take its cues from broader
markets, he said.
    "What's driving the market right now is still a U.S. dollar
story; it's still overall risk sentiment," said Madhavji. "If it
continues to be slightly negative or cautious, we'll continue to
see the U.S. dollar do well."  
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year up 2-1/2
Canadian cents to yield 0.965 percent and the benchmark 10-year
 up 17 Canadian cents to yield 1.933 percent.

 (Editing by James Dalgleish)