CANADA FX DEBT-C$ firms but investors cautious before Fed remarks

Wed Oct 30, 2013 9:40am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ at C$1.0447 vs US$, or 95.72 U.S. cents
    * Fed to release statement at 2:00 pm
    * Canadian bond prices mixed across the curve

    By Leah Schnurr
    TORONTO, Oct 30 (Reuters) - The Canadian dollar strengthened
against the greenback on Wednesday, regaining some ground after
hitting a 1-1/2-month low but investors were cautious ahead of a
policy statement from the U.S. Federal Reserve due later in the
day.  
    The Fed is expected to stay the course with its massive
bond-buying program but investors will be looking for the
central bank's assessment of the economy after recent signs that
 the U.S. economic recovery has lost some momentum.
 
    Any insight on the impact the recent U.S. partial government
shutdown has had on the outlook for the economy will also be
closely watched.
    "The market is very hungry for a little bit clearer
indication on what the Fed is thinking on quantitative easing at
this point," said Greg Moore, FX strategist at TD Securities in
Toronto.
    The Canadian dollar was at C$1.0447 versus the
greenback, or 95.72 U.S. cents, stronger than Tuesday's close of
C$1.0470, or 95.51 U.S. cents.
    The loonie hit its lowest level since early September
earlier in the session.
    The Fed is currently buying $85 billion a month in bonds to
keep borrowing rates low and boost the economy. The central bank
caught markets off guard with its last policy decision in
September when the Fed maintained that amount rather than
reducing it as had been expected.
    The Canadian dollar touched a three-month high following
that announcement, but has weakened since.
    Wednesday's Fed decision will not be followed by a press
conference from Chairman Ben Bernanke, which means there isn't
much opportunity for the central bank to provide the clarity
markets are looking for, said Moore. The Fed will release its
statement at 2:00 pm ET (1800 GMT). 
    "The market will be digging into every subtle change to the
statement, so there is definitely potential for a move this
afternoon," Moore said.
    Canadian government bond prices were mixed across the
maturity curve. The two-year bond rose 0.3 of a
Canadian cent to yield 1.090 percent, and the benchmark 10-year
bond added 6 Canadian cents to yield 2.403 percent.