Reuters: US Dollar Report: CANADA FX DEBT-C$ inches toward parity ahead of rate decision

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CANADA FX DEBT-C$ inches toward parity ahead of rate decision Oct 23rd 2012, 11:57 Tweet Share this Email Print Related Topics Currencies » Bonds News » Bonds » Markets » Tue Oct 23, 2012 7:57am EDT * C$ at C$0.9968 versus the US$, or $1.0032 * Caution evident of a Bank of Canada rate decision * Lower global shares, commodity prices also weigh By Alastair Sharp TORONTO, Oct 23 (Reuters) - The Canadian dollar edged closer to parity with its U.S. counterpart on Tuesday, with caution evident ahead of a Bank of Canada rate decision that will be closely watched for any shift from a hawkish bias. Global shares and commodity prices were also broadly lower, helping to weigh on the currency, which is acutely sensitive to the global growth outlook. At 7:51 a.m. (1151 GMT) the Canadian dollar was trading at C$0.9968 to the greenback, or $1.0032, compared with C$0.9926, or $1.0075, at Monday's North American close. "It's vulnerable here," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada. "A dovish tone, which we expect to see out of the rate statement at 9 a.m, should be enough to weaken off the Canadian dollar." The governor of the central bank gave a speech last Monday that omitted any reference to the withdrawal of "considerable monetary stimulus" and the currency has weakened since then. A Reuters poll conducted after the speech showed that market forecasters now expect any hike to be pushed out to the fourth quarter of next year, and for the bank to water down its hawkish language. None expect a rate change in Tuesday's statement. Highlighting the lack of conviction, prices of safe haven government debt rose across the curve. The two-year bond was up 3 Canadian cents to yield 1.080 percent, while the benchmark 10-year bond rose 35 Canadian cents to yield 1.834 percent. Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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