CANADA FX DEBT-C$ inches higher in quiet trade

Mon Aug 27, 2012 3:55pm EDT
 
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* C$ at C$0.9906 vs. $US or $1.0095
    * Bond prices mixed
    * Fed meeting, Canadian GDP in focus this week

    By Solarina Ho
    TORONTO, Aug 27 (Reuters) - The Canadian dollar rose
modestly against the U.S. dollar on Monday, as the markets eyed
major events later this week to drive further direction.
    The currency tracked global stocks, which edged higher as
hopes of further stimulus moves from central banks supported
markets. 
    "It's just one of those days where nothing's moving
dramatically ... People are trying to take some cues from the
whole thought of QE3 for the U.S.," said Don Mikolich, executive
director of foreign exchange sales at CIBC World Market.
    At 3:37 p.m. EDT (1937 GMT) the Canadian dollar 
traded at C$0.9906 against the U.S. dollar, or $1.0095, firmer
than Friday's North American close at C$0.9916, or $1.0085. 
    The currency traded in a tight range and volumes, already
seasonally light, were particularly thin on Monday due to the
summer bank holiday in Britain.
    "Canada does seem somewhat comfortable in this C$0.99
range," said Mikolich.
    "If there's a breakout, it's probably to the upside back
above par because we've had some undesirable developments in
Europe that have people fleeing to the safety of the U.S.
dollar," said Mikolich.
    Friday's meeting of central bankers from around the world in
Jackson Hole, Wyoming will kick off a busy September that will
see a number of key meetings, events and data that could drive
direction for the Canadian dollar.
    The annual meeting, hosted by the Kansas City Fed, could
hint at the U.S. central bank's monetary policy to come. Markets
will be looking for clues as to when Chairman Ben Bernanke may
unleash a third round of bond purchases to spur the sputtering
U.S. recovery. 
    Also in focus will be Friday's Canadian gross domestic
product figures, which are expected to soft.
    "In Canada, domestic demand (has been) shouldering the
burden for the economic growth in the country and that's
expected to remain the case," said Mazen Issa, macro strategist
with TD Securities, adding that exports were expected to drag on
growth.
    "A lot of data over the course of the quarter suggested that
business investment is not going to be particularly strong.
That's associated with the heightened global uncertainty."     
    Canadian bond prices were mixed, with the two-year bond
 down half a Canadian cent to yield 1.155 percent and
the benchmark 10-year bond up 39 Canadian cents to
yield 1.791 percent.