March 20, 2019 / 1:47 PM / 7 months ago

CANADA FX DEBT-C$ near flat after budget provides subdued fiscal lift

    * Loonie trades in a range of 1.3316 to 1.3345
    * Price of U.S. oil falls 0.3 percent
    * Canadian bond prices were little changed

    TORONTO, March 20 (Reuters) - The Canadian dollar was little
changed against the greenback on Wednesday ahead of an interest
rate decision from the Federal Reserve and after Canada's
federal budget fell short of the amount of stimulus that might
move the Bank of Canada.
    Canadian Prime Minister Justin Trudeau's government, seeking
to move past a political crisis threatening its re-election,
lavished new spending on middle-class voters in its budget on
Tuesday as it forecast a bigger fiscal deficit of C$19.8 billion
in 2019-20.             
    The budget contained spending measures that could lift gross
domestic product by 0.2 percent this year, which is "not enough
to move the dial on Bank of Canada policy," Sal Guatieri, a
senior economist at BMO Capital Markets, said in a note.
    The market has shifted from expecting further rate hikes
from the Bank of Canada, which has tightened 125 basis points
since July 2017, to seeing potential for a rate cut as data
showed a slowdown in the country's economy.           
    Canada said on Tuesday it would issue nearly 20 percent more
bonds in the coming fiscal year to help the Liberal government
fund its spending programs.             
    At 9:31 a.m. (1331 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3321 to the greenback, or 75.07
U.S. cents. The currency traded in a range of 1.3316 to 1.3345.
    The U.S. Federal Reserve on Wednesday is expected to hold
interest rates steady, shave the number of hikes projected for
the rest of the year, and release long-awaited details of a plan
to end the monthly reduction of its massive balance sheet.
            
    The price of oil, one of Canada's major exports, was dragged
down by concerns about global economic growth as the U.S.-China
trade dispute rumbled on, but receiving some support from
tightened supply. U.S. crude oil futures        were down 0.3
percent at $58.86 a barrel.             
    Canadian government bond prices were little changed across
the yield curve, with the 10-year             rising 3 Canadian
cents to yield 1.725 percent. 
    Canada's inflation report for February and January retail
sales data are due on Friday.

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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