March 2, 2011 / 2:10 PM / 9 years ago

CANADA FX DEBT-C$ firms, range-bound after BOC outlook

 * C$ firms to C$0.9727, or $1.0281
 * Bond prices lower across the curve
 By Solarina Ho
 TORONTO, March 2 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Wednesday fueled in part by
stronger oil prices, but remained range-bound a day after the
Bank of Canada left interest rates unchanged.
 At 8:27 a.m. (1327 GMT), the currency CAD=D4 stood at
C$0.9727 to the U.S. dollar, or $1.0281, up from Tuesday's
North American finish of C$0.9749 to the U.S. dollar, or
 The currency was trading off Tuesday's high of C$0.9684 to
the U.S. dollar, however, hit prior to the central bank's rate
decision. It was the highest level reached since November
 "It seems very quiet today in the aftermath of yesterday's
Bank of Canada rate announcement," said David Bradley, director
of foreign exchange trading at Scotia Capital.
 "I think the markets were a little disappointed the
statement was a little bit more dovish, or less hawkish, than
the markets were looking for." [ID:nBCL1EE72W]
 This is the biggest retracement made by the Canadian dollar
in a week, when it had weakened to as low as C$0.9960, although
ADP private-sector jobs data for the U.S., which surpassed
expectations, kept the greenback in check and provided a modest
boost for the Canadian dollar. [ID:nEAP102200] [FRX]
 Oil, a major Canadian export, also provided some strength
as crude oil prices climbed on warnings by Libya that prices
would rise and as government forces fought rebels. U.S. crude
hit more than $100 while Brent reached close to two-and-a-half
year highs, hitting over $115 overseas. For more details see
 Broad-based U.S. dollar weakness and strength in the euro,
driven by expectations of higher interest rates, also helped.
 "If the euro breaks through ($1.3850), just on general
dollar weakness you'll probably see USD/CAD trade back down
C$0.9715 area," said Bradley.
 With little data ahead, the Canadian currency is expected
to be fairly range-bound, said Bradley, who expects the
currency to move between C$0.9700 and C$0.9800 for the
remainder of the week.
 "I think there's probably still plenty of interest on the
top side around C$0.98 by sovereign reserve-types to buy
Canadian dollar to diversify their foreign exchange holdings,"
said Bradley.
 Canadian bond prices were lower across the curve.
 The two-year bond CA2YT=RR was 2 Canadian cents lower
yielding 1.801 percent, while the 10-year bond CA10YT=RR fell
C$0.04 Canadian cents to yield 3.293 percent.
 (Editing by Theodore d'Afflisio)

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