April 20, 2010 / 12:22 PM / 10 years ago

CANADA FX DEBT-C$ edges up ahead of BoC rate decision

 * C$ at C$1.0126, or 98.76 U.S. cents
 * Bonds lower across the curve
 By Claire Sibonney
 TORONTO, April 20 (Reuters) - The Canadian dollar rose slightly against its U.S. counterpart on Tuesday, boosted by strong U.S. corporate earnings and a rally in commodity prices ahead of the Bank of Canada’s interest rate announcement.
 All 12 of Canada’s primary dealers surveyed last week expect the central bank to hold rates steady in its announcement expected at 9 a.m. (1300 GMT). [CA/POLL]
 But market players are hesitant to make big moves one way or the other before getting a fresh sense of the bank’s direction, and will closely scrutinize its accompanying policy statement for hints of timing on the next rate hike.
 The bank has conditionally pledged to keep its key rate at its current ultra-low 0.25 percent level until the end of June so long as inflation remains tame. [ID:nN15256700]
 “The Bank of Canada is definitely helping to support CAD going into the decision. Most analysts are looking for something a little more optimistic than what we’ve seen in the past,” said Jacqui Douglas, currency strategist at TD Securities.
 “We’re looking for upward revisions to GDP growth, probably indications that inflation will return to target sooner and markets are wondering whether the Bank of Canada will signal a rate hike as soon as June.”
 However, Douglas anticipated the central bank will likely keep a cautious tone and keep its options open with two more inflation reports due before its June decision.
 At 8:01 a.m., the Canadian dollar CAD=D4 was at C$1.0126 to the U.S. dollar, or 98.76 U.S. cents, up from Monday’s close at C$1.0148 to the U.S. dollar, or 98.54 U.S. cents.
 Riskier currencies and global equities were buoyed by positive earnings from Goldman Sachs (GS.N), which deflected attention away from the U.S. Securities and Exchange Commission’s fraud charge against it. [.N]
 Oil, gold and base metal prices all rose, which added further support to the commodity-linked currency. [O/R] [GOL/] [MET/L]
 Canadian bond prices were slightly lower, following U.S. Treasuries which were under pressure as a rebound in European stocks on the back of upbeat corporate results whittled bids for lower-risk government debt. [US/]
 The two-year government bond CA2YT=RR edged 3 Canadian cents lower at C$99.365 to yield 1.848 percent, while the 10-year bond CA10YT=RR was down 4 Canadian cents at C$100.680 to yield 3.662 percent.  (Editing by Jeffrey Hodgson)                                                      

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