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CANADA FX DEBT-C$ weakens ahead of Trump speech, Bank of Canada
February 27, 2017 / 10:18 PM / 9 months ago

CANADA FX DEBT-C$ weakens ahead of Trump speech, Bank of Canada

 (Adds broker comment, updates prices to close)
    * Canadian dollar at C$1.3163, or 75.97 U.S. cents
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, Feb 27 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as investors awaited a
Tuesday night speech from U.S. President Donald Trump and a Bank
of Canada interest rate decision due on Wednesday.
    While the central bank is widely expected to hold rates
steady, attention will be paid to the comments of policymakers.
    "We'll hear them probably talk a bit dovishly to offset some
of the more positive data that's come out of Canada recently,"
said Don Mikolich, executive director for foreign exchange sales
at CIBC Capital Markets.
    On Friday, the loonie notched a one-week high at C$1.3057
after data showed a spike in domestic inflation.
    It settled on Monday at          C$1.3163 to the greenback,
or 75.97 U.S. cents, weaker than Friday's close of C$1.3101, or
76.33 U.S. cents.
    It also fell against a string of other currencies including
the euro, the Swiss franc and the Australian dollar.
    Bank of Canada Governor Stephen Poloz said in January an
interest rate cut remains on the table depending on risks,
including "material consequences" if Trump enacts protectionist
    Trump's address to a joint session of Congress is expected
to preview some elements of his tax and spending plans.
    A border adjustment tax is part of a tax reform blueprint
proposed by House Republicans. The loonie would be among the
biggest losers if it is implemented, analysts say.             
    The currency's strongest level of the session was C$1.3084,
while its weakest level was C$1.3180.
    Speculators increased bullish bets on the Canadian dollar to
the most since May, data from the Commodity Futures Trading
Commission and Reuters calculations showed on Friday. Canadian
dollar net long positions rose to 24,584 contracts as of Feb. 21
from 19,340 a week earlier.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries, with the two-year
           price down 3 Canadian cents to yield 0.762 percent
and the benchmark 10-year             falling 35 Canadian cents
to yield 1.647 percent.
    On Friday, the 10-year yield touched its lowest in more than
two months at 1.599 percent.

 (Additional reporting by Fergal Smith; Editing by James

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