CANADA FX DEBT-C$ edges higher ahead of rate announcement

* Ends at C$1.0265 to the US$, or 97.42 U.S. cents

* Bond prices flat to higher across curve

* Trade quiet as U.S. markets closed due to holiday

* Market awaits Tuesday Bank of Canada rate announcement (Updates to close, adds quote)

By Jennifer Kwan

TORONTO, Jan 18 (Reuters) - The Canadian dollar edged higher against the U.S. currency on Monday as firmer prices for key Canadian exports oil and gold, and steady global equity markets, helped to support the currency.

The currency was also higher ahead of a Bank of Canada interest rate announcement on Tuesday morning in which the central bank is widely expected to keep rates steady at 0.25 percent. The announcement is due at 9:00 a.m. (1400 GMT). [ID:nN15201393]

"The Canada might be benefiting at the margin from some speculation about the bank starting to set the stage for an eventual rise in rates," said Paul Ferley, assistant chief economist, Royal Bank of Canada.

All of the 11 primary dealers surveyed by Reuters last week forecast the central bank would stand pat on rates and most expect it to maintain its conditional commitment to keep the key overnight rate at its current level until the end of the second quarter. All see a rate hike at some point this year, however. [CA/POLL]

Trading was light on Monday with U.S. markets closed for Martin Luther King Jr. Day. "We're getting a small move up. I think probably the move might be limited by the U.S. market being closed today," Ferley said.

The price of oil climbed above $78 a barrel after falling for five days, as the greenback eased against a basket of currencies. Bullion prices were also firmer. [O/R] [GOL/]

The Canadian dollar finished at C$1.0265 to the U.S. dollar, or 97.42 U.S. cents, up from Friday's finish at C$1.0294 to the U.S. dollar, or 97.14 U.S. cents.

Camilla Sutton, currency strategist at Scotia Capital, said the Canadian currency was also supported by domestic data that showed foreigners invested heavily in Canadian bonds in November as credit markets recovered and the Canadian dollar rose, pushing total purchases of Canadian securities to C$10.54 billion in the month. [ID:nN18180480]

BOND PRICES FLAT TO HIGHER

Canadian bond prices were flat to slightly higher, with the lack of direction from the U.S. market and uncertainty ahead of the Bank of Canada rate announcement keeping activity subdued.

"With the U.S. market closed, the main source of direction is not there. We're seeing limited move," Ferley said.

The two-year Canada bond edged 1 Canadian cent higher to C$99.96 to yield 1.269 percent, while the 30-year bond climbed 30 Canadian cents to C$115.85 to yield 4.037 percent. (Editing by Peter Galloway)

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App