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CANADA FX DEBT-C$ retreats against stronger greenback; Poloz neutral on rates
November 7, 2017 / 10:23 PM / 12 days ago

CANADA FX DEBT-C$ retreats against stronger greenback; Poloz neutral on rates

    * Canadian dollar at C$1.2777, or 78.27 U.S. cents
    * Bond prices higher across the yield curve
    * Bank of Canada maintains neutral tone on future rate moves

 (Updates figures and Poloz speech, adds FX strategist comments)
    By Solarina Ho
    TORONTO, Nov 7 (Reuters) - The Canadian dollar weakened
against its broadly firmer U.S. counterpart on Tuesday, and
remained range-bound as Bank of Canada Governor Stephen Poloz
maintained a neutral tone on interest rate moves in a speech and
news conference.
    At 4:00 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2777 to the greenback, or 78.27 U.S. cents, down
0.6 percent.
    The currency traded in a range of C$1.2703 to C$1.2820.
    Speaking in Montreal, Poloz defended the use of inflation
targets and repeated the bank's message that it was monitoring
wage growth and inflation, as well as economic capacity to see
how the economy was adjusting to the July and September rate
hikes.            
    "I do think that on net, it may actually suggest that the
hurdle for a move in policy in the near-term is somewhat of a
high bar," said Mazen Issa, senior FX strategist at TD
Securities in New York.
    "At the same time, I'm still somewhat encouraged that the
data is evolving rather constructively."
    The Bank of Canada is expected to hold rates steady in
December following the two hikes. But data last Friday showing
unexpected strength in the nation's job market has supported
expectations of increases next year.           
    The U.S. dollar        strengthened against a basket of
major currencies as investors' spotlight was on the diverging
monetary policies between the United States and the euro zone.
            
    Prices of oil, one of Canada's major exports, cooled after
rallying the most in six weeks the previous day, some 3 percent,
as the Saudi crown prince tightened his grip on power, and
tensions flared between Saudi Arabia and Iran.             
    U.S., Mexican and Canadian officials will kick off some of
the next round of talks to rework the North American Free Trade
Agreement slightly ahead of schedule on Nov. 15, four officials
familiar with the process said on Monday.             
    Canada sends about 75 percent of its exports to the United
States and its economy could suffer if NAFTA collapses.
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 4 Canadian cents to yield
1.399 percent and the 10-year             rising 28 Canadian
cents to yield 1.893 percent, the lowest since Sept. 1.
    The Canadian government issued $3 billion of a U.S.
dollar-denominated five-year global bond at a spread of 9 basis
points over U.S. Treasuries, the first issue by Canada of a U.S.
dollar global bond since March 2015.             

 (Reporting by Solarina Ho; Additional reporting by Fergal
Smith; Editing by Steve Orlofsky)
  
 

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