CANADA FX DEBT-C$ slips on Fed disappointment

Wed Jun 20, 2012 4:38pm EDT
 
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* C$ closes at C$1.0192 vs US$, or 98.12 U.S. cents

* Most Canada bond prices slip, 30-year bonds up

* Fed extends Operation Twist bond-buying program

By Claire Sibonney

TORONTO, June 20 (Reuters) - The Canadian dollar ended lower against its U.S. counterpart on Wednesday following a volatile reaction to the U.S. Federal Reserve after the central bank voted to extend a program to stimulate the economy but offered no clues on further easing.

The Fed expanded its "Operation Twist" by $267 billion, meaning it will sell short-term securities and buy long-term debt in an effort to keep long-term borrowing costs down. The program, which was due to expire this month, will now run through the end of the year.

Still, many market players were let down that the Fed did not launch a third round of outright bond purchases, or quantitative easing, which would expand the Fed's holdings of assets.

Shortly after the Fed's announcement, the Canadian dollar weakened as far as C$1.0232 versus the greenback, or 97.72 U.S. cents, from around C$1.0203, or 98.01 U.S. cents heading into the Fed's statement.   Continued...