Reuters: US Dollar Report: CANADA FX DEBT-C$ weakens in quiet trade, global growth a concern

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CANADA FX DEBT-C$ weakens in quiet trade, global growth a concern Mar 4th 2013, 14:40 Mon Mar 4, 2013 9:40am EST * C$ at C$1.0287 vs US$, or 97.21 U.S. cents * Poor data from Europe, Chinese lending news adds to global worries * Bank of Canada policy statement in focus this week * C$ seen trading between C$1.310 and C$1.0262 By Solarina Ho TORONTO, March 4 (Reuters) - The Canadian dollar was slightly weaker on Monday as investor focus was directed overseas with poor data from Europe and China's announcement that it was planning to tighten lending in its property sector highlighting concerns about global growth. Lack of progress in forming a new government in Italy and broad U.S. spending cuts that automatically kicked in on Friday added to the global economic uncertainty. In Canada, a string of weak economic data over the last few weeks have pressured the currency, though fourth-quarter domestic growth data that came in as forecast on Friday helped mitigate recent declines. "I think a lot of people are calling for further weakness down the road," said David Bradley, director of foreign exchange trading at Scotiabank, adding that with most of the focus abroad and little North American data, markets here are expected to be fairly quiet. At 9:07 a.m. (1407 GMT), the Canadian dollar was trading at C$1.0287 against the U.S. dollar, or 97.21 U.S. cents, softer than Friday's North American finish at C$1.0271, or 97.36 U.S. cents. Canada's dollar has retreated against the greenback since mid-February, when the pair were trading at equal value. It was mostly underperforming a basket of major currencies as well, with the exception of its commodities linked counterpart, the Australian dollar. Bradley did not expect the Loonie, as it's colloquially known, to trade much further beyond today's high of C$1.310 and low of C$1.0262. Looking ahead to the week, the first key driver will be the Bank of Canada's rate decision on Wednesday. The central bank is widely expected to hold rates at 1 percent, so investors will be parsing over the bank's language in its policy statement. Ongoing issues at home and abroad prompted the Bank of Canada to tone down its more hawkish stance in January, saying the withdrawal of monetary policy stimulus was "less imminent than previously anticipated." "Obviously, they might tone down some of the language they've been using in the past. If they totally take out the reference to "less imminent", then obviously that's going to be negative for the Canadian dollar," said Bradley, adding that he did not anticipate the BoC dropping the rate hike reference entirely. Canadian government bond prices were mixed. The two-year bond shed a meager 0.2 Canadian cent to yield 0.940 percent, while the benchmark 10-year bond was up 1 Canadian cent to yield 1.798 percent. Link this Share this Digg this Email Reprints

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