CANADA FX DEBT-C$ firms but investors await Fed clarity
* Canadian dollar at C$1.0619 or 94.17 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Dec 10 (Reuters) - The Canadian dollar firmed against the greenback on Tuesday, continuing to consolidate after recent declines as investors sought clarity on the path of U.S. monetary policy. U.S. Federal Reserve policymakers will meet for two days next week and investors are trying to gauge whether the central bank will announce it is reducing the pace of its economic stimulus efforts, or whether it will hold off until next year. Last week's better-than-expected jobs data in the United States has supported expectations the Fed could start slowing its stimulative bond-buying program sooner rather than later. A top Fed official on Monday gave his voice to a growing contingent at the central bank that has argued for reducing the Fed's bond buying at its meeting next week. The Fed is currently buying $85 billion a month in bonds as part of its quantitative easing, or "QE", program as it tries to keep borrowing costs low and boost the economic recovery. "The message is really that QE tapering is an option at any meeting, as opposed to December is a high probability now," said Greg Moore, FX strategist at TD Securities in Toronto. "That being said, quite a lot of market participants, ourselves included, have brought forward their expectations, but for the most part that hasn't been as far as December, it's mostly January," said Moore. TD Securities is now expecting the Fed will taper in January. The Canadian dollar was at C$1.0619 to the greenback, or 94.17 U.S. cents, stronger than Monday's close of C$1.0635, or 94.03 U.S. cents. A faster timetable for the Fed is seen as a negative for the Canadian dollar as the move is expected to reduce risk appetite and benefit the U.S. currency. The loonie touched a 3-1/2-year low of C$1.0708 last week, undermined by a number of bearish factors, including a more dovish Bank of Canada, weaker oil prices and uncertainty over the Fed's plan. The currency will likely see a range of between the mid-C$1.06 levels and mid-C$1.05 in the short-term, said Moore. Canadian government bond prices rose across the maturity curve, with the two-year up 2-1/2 Canadian cents to yield 1.072 percent and the benchmark 10-year up 39 Canadian cents to yield 2.620 percent.
© Thomson Reuters 2017 All rights reserved.