October 23, 2017 / 9:06 PM / 3 years ago

CANADA FX DEBT-C$ slips, Bank of Canada statement in focus

    * Canadian dollar at C$1.2644, or 79.09 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Oct 23 (Reuters) - The Canadian dollar was slightly
weaker against its U.S. counterpart on Monday after a big fall
to end last week, as investors await a statement from the Bank
of Canada on Wednesday.
    Around 4:00 p.m. ET (2000 GMT), the Canadian dollar         
was trading at C$1.2644 to the greenback, or 79.09 U.S. cents,
down 0.1 percent and at its weakest level since late August.
    The currency had fallen by the most in nine months on Friday
as a drop in domestic retail sales bolstered expectations that
the central bank would hold steady at a policy announcement on
Wednesday after hiking back to back in July and September.
    "The more we're ticking down to the Bank's meeting, the more
I think people are worried about whether the Bank will sound a
little dovish. That's keeping the Canadian dollar soft," said
Mark Chandler, head of Canadian fixed income and currency
strategy at RBC Capital Markets.
    Friday's data was the latest to show the pace of Canadian
economic growth slowing. This comes after a red-hot first half
of the year that saw Canada emerging as a leader among its
industrialized peers.
    The Bank of Canada is expected to hike rates one more time
this year, though an October hike is seen as unlikely, according
to the latest poll by Reuters.            
    Data on Monday showed the value of Canadian wholesale trade
rose by 0.5 percent in August from July on strength in personal
and household goods as well as motor vehicles and parts,
according to Statistics Canada. This was in line with
forecasters, and Chandler said the move was not enough to change
the overall view of the market.    
    The greenback has meanwhile been boosted by progress on U.S.
tax reforms that raised the prospects of a fiscal lift to its
    The European Central Bank is also due to make a policy
announcement this week in which it is expected to start trimming
its monthly asset purchases.
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year            price down 1
Canadian cent to yield 1.478 and the benchmark 10-year
            up 5 Canadian cents to yield 2.025 percent.
    The Canada-U.S. two-year bond spread was -8.6 basis points,
while the 10-year spread was -34.5 basis points.

 (Reporting by Solarina Ho; Additional reporting by Alastair
Sharp; Editing by Susan Thomas)
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