Reuters: US Dollar Report: CANADA FX DEBT-C$ firms on global data as Bank of Canada holds rates

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CANADA FX DEBT-C$ firms on global data as Bank of Canada holds rates Sep 4th 2013, 16:09 Wed Sep 4, 2013 12:09pm EDT * C$ at C$1.0483 vs US$, or 95.39 U.S. cents * Bank of Canada holds benchmark rate at 1 pct * Bank says global economic uncertainty hampers growth * Poll shows C$ expected to weaken slightly in coming months By Solarina Ho TORONTO, Sept 4 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as it played catch-up with a rally in other commodity-linked currencies on upbeat economic data, and after the market digested a no-surprise policy statement from the Bank of Canada. The central bank maintained its overnight target rate at 1 percent, as expected, and upheld its vague rate-hike bias with language identical to its July policy announcement, but said that Canada's economic revival was taking longer than expected. "No one was looking for a change in the overnight rate, obviously, and they kept the forward-looking language entirely intact," said Andrew Kelvin, senior fixed income strategist at TD Securities. "On the margins, it was a bit on the dovish side, but really it's steady as she goes." The bank did note that uncertain global economic conditions were hampering Canadian export growth and business investment. The bank is expected to keep interest rates at current levels until the fourth quarter of 2014, according to a Reuters poll of 35 economists last week. The Canadian dollar was trading at C$1.0483 versus the U.S. dollar, or 95.39 U.S. cents, at around 11:33 a.m. (1533 GMT). That was firmer than its level immediately before the bank's statement and also up from Tuesday's North American finish of C$1.0530, or 94.97 U.S. cents. "Leading into the Bank of Canada, there was uncertainty as to what their statement might contain. And that held the Canadian dollar back from appreciating to the extent that it otherwise would have," said Camilla Sutton, chief currency strategist at Scotiabank. The Canadian dollar, which is expected to weaken slightly in the coming months according to a Reuters poll released on Wednesday, was outperforming all but its commodities-linked sister currencies, the Australian and New Zealand dollars. A string of more positive global economic data so far this week, including a better-than-expected Australian economic growth report, have given growth-sensitive currencies a boost, and the Canadian dollar has benefited from that, Sutton said. "They're very, very strong. After the Bank of Canada statement, which I think was fairly neutral to the Canadian dollar, that just allowed Canada to play catch-up with the uncertainty out of the way," she said. Prices for Canadian government debt were mixed across the maturity curve, with the two-year bond rising half a Canadian cent to yield 1.220 percent and the benchmark 10-year bond off 3 Canadian cents to yield 2.688 percent. Link this Share this Digg this Email Reprints

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