Reuters: US Dollar Report: CANADA FX DEBT-C$ weakens on global growth worries, awaits Bank of Canada

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CANADA FX DEBT-C$ weakens on global growth worries, awaits Bank of Canada Mar 4th 2013, 21:26 Tweet Share this Email Print Mon Mar 4, 2013 4:26pm EST * C$ at C$1.0277 vs US$, or 97.30 U.S. cents * Global data fuels growth worries * Bank of Canada policy statement in focus this week By Andrea Hopkins TORONTO, March 4 (Reuters) - The Canadian dollar ended slightly weaker against its U.S. counterpart on Monday as global economic uncertainty weighed and investors awaited a policy statement from the Bank of Canada later in the week. Weak Chinese manufacturing and services sectors data added to concern about slower growth in the world's second-largest economy, while 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 has pressured the currency. Traders said they are focused on the Bank of Canada's next policy statement, due on Wednesday. While rates are expected to remain unchanged, analysts believe the Canadian dollar could weaken further if the central bank takes a more dovish stance. "The markets are looking for more accommodative language from the bank. There could be some disappointment if we don't see that," said Shaun Osborne, chief currency strategist at TD Securities in Toronto. "They've got to soften up the language a little bit more, or at least recognize that growth has come in a lot, lot weaker than they'd been forecasting." The Canadian dollar ended the North American session at C$1.0277 against the U.S. dollar, or 97.30 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 underperforming most major currencies on Monday, with the exception of its commodities-linked counterpart, the Australian dollar. Looking ahead to Wednesday, the Bank of Canada is widely expected to hold rates at 1 percent, so investors will be parsing 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." "The more dovish they are in the language, the weaker the Canadian dollar should go. But the market is looking for some moderation in the language and if we don't get that the Canadian dollar could recover in the short run," said Osborne. Canadian government bond prices were mixed. The two-year bond was little changed and yielded 0.94 percent, while the benchmark 10-year bond was down 6 Canadian cents to yield 1.806 percent. Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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