CANADA FX DEBT-C$ firms after more upbeat Bank of Canada statement

Wed Dec 3, 2014 11:32am EST
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(Adds updated figures, Bank of Canada statement, currency
reaction, and comments)
    * Canadian dollar at C$1.1346 or 88.14 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Dec 3 (Reuters) - The Canadian dollar strengthened
on Wednesday after the Bank of Canada said the country's
economic recovery is broadening, while it cautioned that
plunging oil prices are a risk and that the global economy is
still struggling.
    The central bank, which held its policy rate unchanged at 1
percent as expected, noted that the impact of stronger Canadian
exports was beginning to show in increased business investment
and more jobs, but that lower prices for oil and other
commodities could have a direct impact in lowering inflation.
     The Canadian dollar touched C$1.1346 to the
greenback, or 88.14 U.S. cents, following the bank's statement,
stronger than Tuesday's close of C$1.1394, or 87.77 U.S. cents.
    "The tone of the communique was less dovish than the last
several," said Craig Alexander, chief economist at
Toronto-Dominion Bank. 
    "This was almost inescapable given the Bank of Canada had to
acknowledge the stronger growth numbers in Canada, the
improvement in the U.S. economy, and the increase in inflation
that we've had."
    Alexander said the caution over the global economy and
falling crude prices likely leaves the Bank of Canada in a
position to keep interest rates where they are, however.
    Also helping the Canadian currency, which was outperforming
most of its major counterparts on Wednesday, were firmer oil
    Crude prices hit a five-year low earlier in the week after
the Organization of the Petroleum Exporting Countries announced
last week it would not cut production levels despite a market
    Canadian government bond prices were mixed across the
maturity curve with short term T-bills higher and longer term
bonds mostly lower. The two-year bond fell 4.5
Canadian cents to yield 1.030 percent and the benchmark 10-year
 slipped 8 Canadian cents to yield 1.966 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)