CANADA FX DEBT-C$ strengthens, helped by soft U.S. data and oil

Tue Oct 28, 2014 4:31pm EDT
 
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* Canadian dollar at C$1.1171 or 89.52 U.S. cents
    * Bond prices end mostly weaker

 (Updates prices, adds analyst comment)
    By Jeffrey Hodgson
    TORONTO, Oct 28 (Reuters) - The Canadian dollar strengthened
against the U.S. currency on Tuesday, helped by soft U.S. data
that weighed on the greenback and a slight recovery in the price
of oil.
    The U.S. dollar fell against a range of currencies as
U.S. durable goods and home price data disappointed investors
and raised worries about the economy as Federal Reserve
officials began a two-day policy meeting. 
    "The Canadian dollar is benefiting from U.S. dollar
weakness, number one. Number two, oil is showing a little bit of
life after a dismal month," said Adam Button, a currency analyst
at ForexLive in Montreal.
    Crude oil prices closed higher, with Brent finishing
just above $86 a barrel after two straight days of losses,
helped by a rally on Wall Street.  
    "Oil has been one of the key drivers of markets generally
... and typically that's usually a fairly good environment for
the Canadian dollar," said Camilla Sutton, chief currency
strategist at Scotiabank.
    "But the broad picture is that the Canadian dollar has
really been stuck in a range, a lot of currencies have, trying
to look for where the next shift is going to be, and with the
Fed meeting tomorrow, that puts a big risk in the horizon."
    While the Fed is expected to announce the end of its
bond-purchase program at the conclusion of its two-day meeting,
the U.S. central bank will likely reinforce its willingness to
wait a while before raising interest rates. 
    The Canadian dollar closed at C$1.1171 , or 89.52
U.S. cents, stronger than Monday's North American session close
at C$1.1238, or 88.98 U.S. cents.
    At home, traders are looking ahead to testimony by Bank of
Canada Governor Stephen Poloz to the Senate banking committee on
Wednesday. His testimony had been scheduled for last week but
was canceled due to a gunman's attack on Parliament Hill.
 
    "Poloz is always a major risk for Canadian dollar traders.
The Bank of Canada has been extremely disciplined in terms of
sending a message of patience on rates and on the economy. That
will continue to be the case tomorrow," said Button.
    The central bank has kept its main policy rate at 1 percent
since September 2010.
    Canadian government bond prices were mostly weaker, with the
two-year down nearly 2 Canadian cents to yield 1.01
percent. The benchmark 10-year was down 14 Canadian
cents to yield 2.03 percent.

 (Additional reporting by Andrea Hopkins; Editing by James
Dalgleish)