July 12, 2017 / 1:31 PM / 10 days ago

CANADA FX DEBT-C$ flat as investors await Bank of Canada rate decision

3 Min Read

    * Canadian dollar at C$1.2915, or 77.43 U.S. cents
    * Bond prices higher across the yield curve
    * Bank of Canada interest rate decision due

    TORONTO, July 12 (Reuters) - The Canadian dollar was
unchanged against its U.S. counterpart on Wednesday as investors
braced for the Bank of Canada's interest rate decision, oil
prices rose, and the greenback dipped against a basket of major
currencies. 
    The Bank of Canada is widely expected to raise interest
rates for the first time in nearly seven years, following the
U.S. Federal Reserve in trying to inch them back to normal after
the global financial crisis a decade ago.             
    But the rapid climb in Canadian yields since the Bank of
Canada turned hawkish last month may have gone far enough for
the central bank, which is also concerned about risks to
financial stability. Higher yields are already pushing up
borrowing costs for highly indebted Canadians.                  
    At 8:55 a.m. ET (1255 GMT), the Canadian dollar          was
trading unchanged at C$1.2915 to the greenback, or 77.43 U.S.
cents.
    The currency traded in a range of C$1.2894 to C$1.2941.
    Prices of oil, one of Canada's major exports, climbed after
data showed a fall in U.S. fuel inventories and the U.S.
government lowered its forecast for crude output.             
    U.S. crude        was up 2.0 percent at $45.94 a barrel.
    The U.S. dollar        lost ground after the release of Fed
Chair Janet Yellen's prepared testimony to be delivered to
Congress Wednesday morning.             
    Canadian home prices rose in June, with the cities of
Toronto and Hamilton leading the way despite provincial
government efforts to rein in demand in the hot markets, data
showed.                     
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
price rose 9 Canadian cents to yield 1.11 percent, and the
10-year             climbed 38 Canadian cents to yield 1.85
percent.
    On Tuesday, the 10-year yield touched its highest since June
2015 at 1.903 percent.       

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
  
 

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