CANADA FX DEBT-C$ firms as bounces off key resistance level

Mon Sep 15, 2014 9:59am EDT
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* Canadian dollar at C$1.1071, or 90.32 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, Sept 15 (Reuters) - The Canadian dollar firmed
against the greenback on Monday, bouncing back from a more than
five-month low hit overnight, even after data over the weekend
showed the Chinese economy lost steam in August.
    Investors started the week with some major events on the
horizon, including a policy statement from the U.S. Federal
Reserve on Wednesday and a speech from the head of the Bank of
Canada on Tuesday.
    Scotland's vote on whether to leave the United Kingdom will
also be later in the week, which has the potential to roil
    The U.S. dollar-Canadian dollar broke through some key
resistance levels last week and took a run at piercing the next
barrier at C$1.11 in the overnight session but was unable to
push above it.
    "The fact that we couldn't get above the C$1.11 suggests
that the market is very much in a wait and see attitude with
those three important items this week," said Don Mikolich,
executive director of foreign exchange sales at CIBC World
Markets in Toronto.
    Stephen Poloz, governor of the Bank of Canada, will be
speaking on the topic of the role of a floating exchange rate in
his first speech since the central bank reaffirmed its neutral
stance in a policy statement earlier this month. The speech will
be followed by a press conference.
    Still, the Fed announcement is likely to be the biggest
event of the week, with investors speculating the central bank
could provide insight on when interest rates will start to rise.
Any hint of a rate hike sooner rather than later would likely
boost the greenback to the loonie's detriment. 
    "The market wants to see, aside from the end of tapering,
what's in store in terms of any actual tightening schedule. The
U.S. dollar seems to be performing well against all currencies,
but that is lining itself up to be the story of the week,' said
    The Canadian dollar was at C$1.1071 to the
greenback, or 90.32 U.S. cents, stronger than Friday's close of
C$1.1094, or 90.14 U.S. cents.
    A number of weak economic figures from China over the
weekend prompted some economists to trim their growth forecasts
for the country. The loonie is often sensitive to economic news
out of China, which is a major consumer of resources.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1-1/2 Canadian
cents to yield 1.151 percent and the benchmark 10-year
 up 16 Canadian cents to yield 2.223 percent.

 (Editing by Jeffrey Benkoe)