INSIDE CANADA: CAD Fluctuates Before Bank of Canada Meeting

This is an overview of Canada’s currency and debt markets:

FX: * CAD fluctuated at 1.0964 per U.S. dollar after rising from 1.1019 yday, the lowest since Sept. 4, 2009. CAD has dropped 3.1 percent this year against USD. * CAD’s drop has been fueled by speculation Bank of Canada would signal chance of lower interest rates at its policy meeting today, Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, said in a note * CAD will post short-term rally today as the bank is unlikely to insert an easing bias in its policy statement, Osborne wrote * BoC decision at 10 a.m. followed by 11:15 a.m. press conference * Bank will keep overnight rate at 1 percent according to all 21 economists in a Bloomberg survey * Bank won’t signal need for lower rates, according to all 17 economists in a separate Bloomberg survey * CAD 14-day relative strength index has been below the 30-level that signals it may be due to rise for the past seven days

GOVT DEBT: * Yield (GCAN10YR) on 10-year government bond little changed at 2.51% * 1.5% security due in June 2023 falls 3 cents to 91.64 * Yield spread of provincial bonds over federal debt were unchanged at 65 bps, according to Bank of America Merrill Lynch Canadian Provincial & Municipal Index * Effective yield on provincial debt rises to 2.88%, from 2.87% yday

CORP DEBT: * Yield spread on corporate bonds over federal was unchanged yday at 114 bps, according to Bank of America Merrill Lynch Canada Corporate Index * Effective yield on corporate debt rises to 2.91%, from 2.90% yday

To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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