CANADA FX DEBT-Canadian dollar weakens after FOMC, eyes now on Bank of Canada

Wed Oct 29, 2014 4:24pm EDT
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* Canadian dollar at C$1.1191 or 89.36 U.S. cents
    * Bond prices mostly weaker

 (Updates to close, FOMC statement)
    By Andrea Hopkins
    TORONTO, Oct 29 (Reuters) - The Canadian dollar weakened
against the greenback on Wednesday after an upbeat statement by
the U.S. Federal Reserve drove the U.S. dollar higher, but
traders awaited Bank of Canada testimony that could strengthen
the Canadian currency.
    The Fed, as expected, announced the end of its stimulus
program and said the U.S. economic recovery would remain on
track despite a slowdown in many parts of the global economy,
sparking a selloff in bond markets and boosting the greenback.
    Traders in Canada were awaiting testimony by Bank of Canada
Governor Stephen Poloz at the Senate banking committee. The
appearance had been scheduled for last week but was canceled due
to a gunman's attack on Parliament Hill. 
    "If (Poloz) ... talks a lot about the positives we're seeing
in the U.S. economy, that should be a positive for the Canadian
dollar to gain some ground. However if he focuses on the lack of
global growth and the negative effect it could have on
commodities, that could drive us back up through that C$1.12
level," said Ken Wills, currency strategist and broker at
CanadianForex in Toronto.
     The Canadian dollar ended the North American
session at C$1.1191, or 89.36 U.S. cents, weaker than Tuesday's
close at C$1.1171, or 89.52 U.S. cents. Earlier in the session
it touched a three-week high of C$1.1122, it's strongest point
since Oct. 9, on the back of stronger oil prices.
    Wills said the fact that $80 seems to have held as a floor
for oil prices in the short-term should be positive for Canada
and other commodity-linked currencies. 
    "It's looking more and more like value buyers are coming in
at these levels, hopefully that floor will hold on oil. That's a
key level for oil sands production (in Canada)," he said.
    Poloz began his testimony at 4:15 p.m. EDT (2015 GMT). 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 5.5 Canadian cents to yield 1.040
percent. The benchmark 10-year was down 26 Canadian
cents to yield 2.058 percent.

 (Reporting by Andrea Hopkins; Editing by Peter Galloway and
Cynthia Osterman)