CANADA FX DEBT-C$ firms but investors keep eye on Fed policy
* Canadian dollar at C$1.0593 or 94.40 U.S. cents * Bond prices lower across the maturity curve * Bank of Canada head Poloz to speak on Thursday By Leah Schnurr TORONTO, Dec 11 (Reuters) - The Canadian dollar strengthened against the greenback on Wednesday as a lack of data and recent stabilization in oil prices gave the loonie some relief after last week's rout. While the loonie has recovered some ground this week after hitting a 3-1/2-year low, analysts expect the currency will trade in a range heading into next week's meeting of Federal Reserve policymakers, which is expected to shed light on the path of U.S. monetary policy. Investors could also get more insight into policy at home, with Bank of Canada Governor Stephen Poloz scheduled to give a speech on Thursday on "Monetary Policy as Risk Management". The central bank's recent more dovish stance is expected to weigh on the Canadian dollar in the long-term. "It was just time for a little bit of a pullback until we see what the next round of data and discussions look like," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. "Most forecasts seem to be calling for C$1.06 and above for the next quarter or so. Any movement lower here is seen as temporary relative to a major change in direction." The Canadian dollar ended the North American session at C$1.0593 to the greenback, or 94.40 U.S. cents, stronger than Tuesday's close of C$1.0603, or 94.31 U.S. cents. Although U.S. crude futures were down on Wednesday, prices have firmed since the beginning of the month, lending support to the commodity-sensitive loonie. Brent crude settled up 32 cents at $109.70 a barrel. Since trading as far as C$1.0708 last week, the currency has risen by more than 1 percent. Still, the Canadian dollar is down nearly 3 percent since late October, when the Bank of Canada first dropped its rate-hike bias. The currency could see a retracement to as far as the mid- to low-C$1.05 levels, said Gareth Sylvester, director at Klarity FX in San Francisco. "I think that would be a healthy correction in the context of the ascending market that we've witnessed over the last few weeks and months," said Sylvester. In the longer term, the loonie could fall back to around C$1.085, he said. The major focus for markets has been when the Fed will start to reduce its stimulative bond-buying program. Investors are trying to gauge whether the central bank will announce the wind down next week or hold off until the new year. 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 to boost the economic recovery. 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. Canadian government bond prices were lower across the maturity curve, with the two-year off 3-1/2 Canadian cents to yield 1.095 percent and the benchmark 10-year was down 23 Canadian cents to yield 2.643 percent.
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