May 30, 2011 / 2:00 PM / 9 years ago

CANADA FX DEBT-C$ little changed before BoC, GDP reaction muted

 * C$ at C$0.9783 vs US$; seen rangebound ahead of BoC
 * Bond prices mostly firmer after GDP data
 * Q1 GDP strongest in a year, slightly below consensus
 (Updates after GDP data)
 By Claire Sibonney
 TORONTO, May 30 (Reuters) - Canada's dollar was little
changed against the U.S. currency on Monday after growth data
offered few surprises ahead of an interest rate decision on
Tuesday in which the central bank is expected to stay on hold.
 Canada's economy grew at its fastest pace in a year in the
first quarter as businesses replenished inventories and
invested in new equipment while consumer spending remained
flat. [ID:nN30202447]
 Gross domestic product grew at an annualized rate of 3.9
percent in the quarter, a notch below market forecasts of 4
percent growth.
 The Canadian dollar immediately firmed to match a session
high after the data release, but subsequently softened.
 The report did little to change the market view that the
Bank of Canada will only resume tightening monetary policy
sometime in the third quarter. The central bank is almost
unanimously expected to keep its key rate steady at 1 percent.
 At 9:25 a.m. (1325 GMT), the currency CAD=D4 was at
C$0.9783 to the U.S. dollar, or $1.0222, off slightly from
Friday's North American session close at C$0.9773 or $1.0232.
 The day's range held between C$0.9752-C$0.9790, close to
where it's stood for the past week of uninspiring moves.
 "There really wasn't much of a surprise here at all," said
Doug Porter, deputy chief economist at BMO Capital Markets.
 "Sometimes the GDP numbers do deliver big surprises. When
they're within a tenth or two of consensus, that's pretty much
as expected."
 David Tulk, chief Canada macro strategist at TD Securities,
added that market response was also muted due to market
holidays in the United States and Britain.
 "It's such a small move and the market is still pretty
quiet so I think that the trend pretty much is towards a
rangebound session," he said.
 Weighing slightly on the commodity-driven currency was a
dip in oil prices, on expectations that OPEC's oil output in
May would come in higher than April. [O/R]
 Canadian bond prices were little changed following the GDP
data. Canada's two-year bond CA2YT=RR was up 5 Canadian cents
to yield 1.503 percent, while the 10-year bond CA10YT=RR
added 8 Canadian cents to yield 3.054 percent.
 (Editing by Jeffrey Hodgson)

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