CANADA FX DEBT-C$ steady as Fed, Bank of Canada comments weighed

Thu Oct 30, 2014 4:58pm EDT
 
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(Adds analyst's comment, details, closing figures)
    * Canadian dollar at C$1.1196 or 89.32 U.S. cents
    * Bond prices mostly higher across the maturity curve

    By Solarina Ho
    TORONTO, Oct 30 (Reuters) - The Canadian dollar held steady
against a stronger greenback on Thursday as investors limited
their bets and mulled over the implications of the more hawkish
tone adopted by the U.S. Federal Reserve and comments by the
governor of the Bank of Canada.
    In its latest statement, the Fed said on Wednesday it was
ending its monthly bond purchase program and dropped a
characterization of U.S. labor market slack as "significant" in
a show of confidence in the economy. 
    After markets closed on Wednesday, Bank of Canada Governor
Stephen Poloz said he welcomed the Fed's latest move, saying it
showed the U.S. economy is gaining traction, but he warned
weaker oil prices will crimp Canadian growth. 
    "I don't think it's just the loonie which is being sidelined
here. After yesterday's (Fed) announcement, the (U.S.) dollar
got its big move. Now everybody's just sitting there, digesting
it," said Amo Sahota, director at Klarity FX in San Francisco.
    "For USD/CAD, it's kind of gone into this stagnant phase ...
The market's also trying to digest the comments by Poloz last
night."
    The Canadian dollar closed at C$1.1196 to the U.S.
dollar, or 89.32 U.S. cents, little changed from Wednesday's
finish of C$1.1191, or 89.36 U.S. cents.
    The loonie did recoup most of its early-session losses after
data showed the U.S. economy grew at a more robust pace than
expected in the third quarter.
    But details in the report hinted at some loss of momentum,
with the pace of business-investment, housing and
consumer-spending growth slowing from the previous quarter.
 
    "Maybe markets were looking through the headline as they
should," said Benjamin Reitzes, senior economist and foreign
exchange strategist at BMO Capital Markets. "The details of the
report were not quite as firm as the headline. Domestic demand
was not all that great in the U.S." 
    Reitzes said the Canadian currency is likely to be confined
to a range between C$1.11 and C$1.14 for the remainder of the
year unless there is a major catalyst or another big fall in oil
prices. He added that attention will likely remain focused on
the Fed in the near term.
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year rising almost 1
Canadian cent to yield 1.038 percent and the benchmark 10-year
 rising 10 Canadian cents to yield 2.046 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)