TORONTO (Reuters) - The Canadian dollar finished little changed against the greenback on Monday in very thin holiday trading and ahead of a busy week in North American economic news.
Investors are focused on the Bank of Canada’s interest rate decision on Wednesday and first-quarter economic growth data on Friday, as well as a jam-packed U.S. data calendar that could have implications for the U.S. Federal Reserve.
“For the Bank of Canada ... There’s definitely risk, but I’d say expectations are pretty firmly for a status quo statement,” said Greg Moore, senior currency strategist at RBC Capital Markets.
Moore noted that Governor Stephen Poloz already telegraphed in a speech last week that the Bank’s position has not changed much since the last meeting and monetary policy report in April.
“Even if it’s a disappointment, which is what RBC expects, it won’t be far off of the flat growth that the Bank of Canada was calling for. They’ve already said they’re looking through whatever happens in Q1 to what happens to Q2,” Moore said.
The loonie’s pause comes after a retreat to a five-week low on Friday and with U.S. and many European markets closed for various holidays.
The Canadian dollar CAD=D4, which was weaker than all of its key currency counterparts, was trading at C$1.2313 to the greenback, or 81.21 U.S. cents, negligibly weaker than the Bank of Canada’s official close of C$1.2301, or 81.29 U.S. cents on Friday.
The currency traded within a tight range, between C$1.2276 and C$1.2319.
Despite the upcoming Canadian economic events on the calendar, the loonie will likely take much of its direction from greenback action on U.S. economic data, which includes durable goods, consumer confidence and services data on Tuesday and first quarter GDP data later in the week. ECONUS
“You would expect some implication from the Canadian developments but I think the real developments will be out of the U.S.,” said Moore.
Canadian government bond prices were mixed across the maturity curve, with the two-year CA2YT=RR price up 1.5 Canadian cents to yield 0.673 percent and the benchmark 10-year CA10YT=RR falling 9 Canadian cents to yield 1.780 percent.
The Canada-U.S. two-year bond spread was 5.5 basis points, while the 10-year spread was -43.5 basis points.
Reporting by Solarina Ho; Editing by Lisa Von Ahn and Diane Craft