CANADA FX DEBT-C$ little changed as investors await Fed, data

Mon Jul 29, 2013 9:45am EDT
 
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* C$ at C$1.0277 vs US$ or 97.30 U.S. cents
    * Fed policy debate in focus, U.S. dollar under pressure
    * Bond prices mixed

    By Andrea Hopkins
    TORONTO, July 29 (Reuters) - The Canadian dollar held steady
near a five-week high against the U.S. dollar on Monday as
expectations the Federal Reserve will reaffirm its pledge to
keep U.S. interest rates near zero kept the greenback on the
defensive.
    Investors are in wait-and-see mode before meetings this week
of the Fed, the European Central Bank and the Bank 
of England. All are expected to repeat or refine their "forward
guidance" that borrowing costs will remain extraordinarily low
as long as growth is sub-par and inflation poses no threat.
 
    The Fed will be most closely scrutinised, having signalled 
plans to begin phasing out its money-printing stimulus this 
year. Most economists are eyeing a September start but markets 
have scaled back views of any aggressive changes.     
    "Everyone is waiting for the Fed, the FOMC (Federal Open
Market Committee) meeting on Wednesday, which should dictate the
next month or so of trading. The market is definitely dovish,
expecting the Fed to maintain its bias to keep interest rates
low for an extended period of time," said John Curran, senior
vice president at CanadianForex.
    The U.S. dollar has been under pressure, giving back
three-quarters of June's 5 percent gain and hitting a five-week
low against a basket of currencies and one-month low
against the yen. 
    At 9:26 a.m. (1326 GMT), the Canadian dollar was at
1.0277 versus the U.S. dollar, or 97.30 U.S. cents, little
changed from Friday's North American session close at C$1.0273
versus the U.S. dollar, or 97.34 U.S. cents.
    The currency touched a five-week high last week, and Curran
said he expects it to trade in a tight range until Wednesday.
    "The Canadian dollar seems to be getting back to
middle-of-the-road levels for recent months. I would look for
anything towards the C$1.02 area to be well supported for the
U.S. dollar - people wanting to sell Canadian dollars there,"
said Curran.
    "On the top side, it would have to break above C$1.035 to
get interesting," he added.
    Canada and the United States, its largest export market, 
will release economic growth data this week, while the United
States also will issue July jobs data.
    The price of Canadian government debt was mixed. The
two-year bond fell 1 Canadian cent to yield 1.153
percent, while the benchmark 10-year bond fell 12
Canadian cents to yield 2.466 percent.