CANADA FX DEBT-C$ ends unchanged after earlier strength as uncertainty looms

Fri Sep 19, 2014 4:29pm EDT
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* Canadian dollar closes unchanged C$1.0947 or 91.35 U.S.
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Sept 19 (Reuters) - The Canadian dollar closed
unchanged against the greenback on Friday after touching its
firmest in nearly two weeks, as market participants looking for
a safe haven bolstered the U.S. dollar.
    The Canadian dollar had strengthened early in the session
after Canadian inflation data showed the closely watched core
inflation rate unexpectedly jumped above 2 percent in August.
    "That's been offset by this newfound uncertainty that's
taken place in the markets," said Bipan Rai, director of foreign
exchange strategy at CIBC World Markets in Toronto, saying this
week's policy statement by the U.S. Federal Reserve offered
conflicting messages.
    "Price action like this is consistent with a market that's
worried about uncertainty and gravitating towards the U.S.
dollar," Rai said.
    The Fed renewed its pledge to keep interest rates near zero
for a "considerable time", but also indicated it could raise
borrowing costs faster than expected when it starts moving.
    The U.S. dollar gained against a basket of major currencies
, posting its 10th consecutive week of gains, as investors
bet U.S. interest rates would rise more quickly than had been
    The Canadian dollar, which was outperforming most
of its counterparts, finished unchanged from Thursday's Bank of
Canada close of C$1.0947, or 91.35 U.S. cents. Earlier, it
briefly touched C$1.0887, or 91.85 U.S. cents, its strongest
level in nearly two weeks.
    In Canada, the overall annual inflation rate was steady at
2.1 percent, in line with analysts' expectations, but above the
Bank of Canada's 2 percent target for the fourth straight month.
However, the core rate, which strips out the prices of some
volatile items, rose to 2.1 percent last month from 1.7 percent
in July, hitting a level last seen in April 2012.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year down half a
Canadian cent to yield 1.172 percent and the benchmark 10-year
 up 25 Canadian cents to yield 2.254 percent.

 (Editing by Peter Galloway and James Dalgleish)