Monday October 19, 2009 - 21:10:46 GMT
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Forex Market News - CANADA FX DEBT-C$ gains ahead of BoC rate announcement
Mon Oct 19, 2009 5:02pm EDT
* C$ finishes at C$1.0293 to the U.S. dollar
* Focus on Tuesday's Bank of Canada rate announcement
* Bond prices flat to higher
(Updates with closing figures, adds quote)
By Frank Pingue
TORONTO, Oct 19 (Reuters) - The Canadian dollar was higher
against the greenback on Monday afternoon, rising on firm
commodity prices and ahead of the Bank of Canada's interest
rate announcement on Tuesday.
The rally was aided also by a weaker U.S. dollar as
investors bet the Federal Reserve will hold U.S. interest rates
near zero well into next year. [FRX/]
"It's really just recouping some of the lost ground from
Friday and over the weekend," said Eric Lascelles, chief
economics and rates strategist TD Securities.
"And the market has managed to wrap its head around the
idea that the Bank of Canada is not hiking (rates) in the near
term and as a consequence the selling pressure in Canada has
abated now that markets are aware of that fact."
The Bank of Canada is expected to keep interest rates
steady at record lows and only tinker with its economic
forecasts on Tuesday as it waits for firmer evidence of
economic recovery. [ID:nN16310648]
Canada's currency CAD=D3 rose as high as C$1.0282 to the
U.S. dollar, or 97.26 U.S. cents on Monday.
It closed at C$1.0293 to the U.S. dollar, or 97.15 U.S.
cents, up from C$1.0382 to the U.S. dollar, or 96.32 U.S.
cents, at Friday's close.
Helping the currency's rise were gold prices that held
above $1,060 an ounce and oil prices that steadied above $79 a
barrel. [GOL/] [O/R]
BONDS FLAT TO HIGHER
Canadian bond prices, with no major domestic economic data
to influence trade, were flat to slightly higher as investors
were reluctant to make any big bets ahead of the Bank of Canada
interest rate statement on Tuesday morning.
"Yields are generally higher but they're off their worst
levels for the bank's meeting tomorrow," said Mark Chandler,
fixed income strategist at RBC Capital Markets.
"There's a little anticipation over what the Bank of Canada
might say tomorrow."
Longer-dated bonds followed the big U.S. Treasuries market,
said Chandler, where prices rose on a weaker reading of U.S.
homebuilder sentiment. [US/]
The two-year bond CA2YT=RR was flat, up 1 Canadian cent
at C$99.23 to yield 1.625 percent, while the 30-year bond
CA30YT=RR climbed 25 Canadian cents to C$117.25 to yield
(Additional reporting by Jennifer Kwan; editing by Peter
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