CANADA FX DEBT-C$ firms modestly at the end of dismal 2014

Tue Dec 30, 2014 4:23pm EST
 
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* Canadian dollar at C$1.1607 or 86.15 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    OTTAWA, Dec 30 (Reuters) - The Canadian dollar firmed
against the greenback on Tuesday but the relief paled in
comparison to the more than 8 percent loss the loonie has seen
in 2014, putting it on track for its worst year since 2008.
    With just one more trading day left for the year, the
Canadian dollar was expected to stick to a tight range in
subdued holiday volume.
   Jitters over the future of Greece's bailout program as the
country heads to an early election next month sapped investors'
appetite for risk, sending the U.S. dollar lower to the
benefit of the loonie. 
    "Overall, the loonie is following the broader trend in the
U.S. dollar," said Martin Schwerdtfeger, FX strategist at TD
Securities in Toronto.
    "Even if the broader view is that the U.S. dollar-Canadian
dollar should be going higher, at this point nobody is willing
to extend U.S. dollar longs."
    The Canadian dollar ended the North American
session at C$1.1607 to the greenback, or 86.15 U.S. cents,
modestly stronger than Monday's close of C$1.1629, or 85.99 U.S.
cents.
    Still, the Canadian dollar is down 8.5 percent this year, on
pace for its worst performance in six years, when markets were
gripped by the global credit crisis.
    Analysts expect the Canadian dollar will continue to lose
ground in 2015, with the United States expected to lift interest
rates before the Bank of Canada does. The weak price of oil,
which is a major export for Canada, is also seen weighing on the
currency.
    While the balance of risks suggest the Canadian dollar could
work its way toward C$1.18 or C$1.20, a stabilization in oil
prices would likewise stabilize the currency, said Amo Sahota,
director at Klarity FX in San Francisco.
    "If oil prices actually stabilize, then I think U.S.
dollar-Canadian dollar could have fairly quiet period for the
first quarter of next year," Sahota said. 
    "By quiet, I mean we could see it go back down toward C$1.12
and that really doesn't do much in the big scheme of how U.S.
dollar-Canadian dollar has traded over the past 12 to 18
months."
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3 Canadian cents
to yield 1.018 percent and the benchmark 10-year up
16 Canadian cents to yield 1.815 percent.

 (Editing by Grant McCool)