CANADA FX DEBT-C$ firms a bit in light pre-Christmas trade

Wed Dec 24, 2014 12:45pm EST
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* Canadian dollar at C$1.1623 or 86.04 U.S. cents
    * Bond prices mostly lower across the maturity curve

 (Adds details, quote, updates prices)
    By Leah Schnurr
    OTTAWA, Dec 24 (Reuters) - The Canadian dollar firmed
slightly against the greenback on Wednesday as market
participants booked profits in the U.S. currency ahead of the
Christmas holidays.
    The loonie stuck to a tight range in light volume. Canadian
and U.S. bond and equity markets were open for only half the
day. Canadian markets will be closed on Thursday and Friday for
the Christmas and Boxing Day holidays. 
    A slight decline for the U.S. dollar helped the
Canadian dollar, which has tumbled in recent months in the face
of plunging oil prices and broad investor favor for the
    "It's a little bit of profit-taking, maybe a little bit of
positioning-squaring heading into holidays, and not really a
thematic play," said Camilla Sutton, chief currency strategist
at Scotiabank in Toronto.
    The Canadian dollar ended at C$1.1623 to the
greenback, or 86.04 U.S. cents, according to the official close
from the Bank of Canada. That was a tad stronger than Tuesday's
C$1.1630, or 85.98 U.S. cents.
    Still, the gains were minuscule compared with the rout of
the Canadian dollar over the past six months as the currency has
fallen with the price of oil, a major Canadian export. It has
shed 8.6 percent for 2014, on track for its worst year since
    Analysts expect the Canadian dollar will weaken further as
2015 gets underway. With the U.S. Federal Reserve likely to
raise interest rates next year, investor appetite for the U.S.
dollar is set to be renewed to the detriment of the loonie.
    A stronger U.S. economy, as evidenced by this week's 5
percent annualized pace of growth in the third quarter, will
also benefit the greenback.
    "While Canada looks to do better against the other majors,
like the euro, sterling, even the Australian dollar, that will
essentially give it a little bit of protection against U.S.
dollar strength, but there really is no place to hide from the
big dollar in 2015," said Brad Schruder, director of foreign
exchange sales at BMO Capital Markets in Toronto.
    "It's impossible to ignore the strength of the U.S.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down half a
Canadian cent to yield 1.058 percent and the benchmark 10-year
 down 6 Canadian cents to yield 1.911 percent. The
bond market was scheduled to close at 1:00 p.m. EST (1800 GMT).

 (Editing by Peter Galloway)