CANADA FX DEBT-C$ remains under pressure on Fed tapering, dovish BoC
By Solarina Ho TORONTO, Dec 9 (Reuters) - The Canadian dollar softened marginally against its U.S. counterpart on Monday as a dearth of data kept trading subdued and markets continued to anticipate the U.S. Federal Reserve will eventually scale back its massive bond purchases. The currency extended Friday's losses following better-than-expected employment data in the United States, which supported expectations the Fed could taper sooner rather than later. "Everyone still considers it to be an uptrend, the dollar versus Canada - as in the Canadian dollar weakening," said Darcy Browne, managing director of Capital Markets Trading at CIBC. "The majority of that is on the basis of potential tapering, a stronger U.S dollar in general as well as a more dovish Bank of Canada ... having said that, we haven't really done very much over the last two, three days," he added. The Bank of Canada - concerned about the amount of slack in the economy - kept its overnight interest rate at a near record low last week and economists in a Reuters poll expect no change until the second quarter of 2015. The Canadian dollar was trading at C$1.0667 to the greenback, or 93.75 U.S. cents at 9:42 a.m. (1442 GMT), weaker than Friday's North American finish at C$1.0656, or 93.84 U.S. cents. The loonie, which was underperforming most major currency counterparts on Monday, was expected hold near current trading ranges and capped around C$1.0670 as the market awaited fresh news, said Browne. A faster timeline for the Fed reducing its $85 billion a month in bond purchases is seen as bearish for the Canadian dollar as the move is expected to reduce risk appetite and benefit the U.S. currency. Canadian government bond prices rose across the maturity curve, with the two-year up 3.2 Canadian cents to yield 1.078 percent and the benchmark 10-year rose 14 Canadian cents to yield 2.672 percent.
© Thomson Reuters 2016 All rights reserved.