CANADA FX DEBT-C$ slips with crude, markets eye Fed minutes

Wed Feb 18, 2015 10:05am EST
 
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* Canadian dollar at C$1.2444 or 80.36 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Feb 18 (Reuters) - The Canadian dollar softened
against the greenback on Wednesday, as the market awaited the
minutes of the most recent Federal Reserve meeting and crude
prices retreated.
    Markets were also digesting a flurry of data, mostly out of
the U.S., including figures that showed plunging crude prices
were keeping a lid on inflation, which could argue against an
interest rate hike by the Fed. 
    U.S. housing starts fell in January as ground breaking for
single-family projects slipped off a 6-1/2 year high.
 
    In Canada, wholesale trade jumped a more-than-expected 2.5
percent to C$55.4 billion in December on widespread gains across
the sectors. 
    "They seemed to more or less cancel each other out ... We're
just looking for the Fed to set the tone," said David Tulk,
chief Canada macro strategist at TD Securities. 
    "There is also the issues around Greece - trying to weigh
the different cross currents where the Fed will be upbeat and
everyone else is more worried."    
    Greece said it will request a loan extension from its EU
creditors, but Germany says no such deal is on offer and that
Athens much stick to the term of its exiting international
bailout.
    At 9:35 a.m. (1435 GMT), the Canadian dollar was at
C$1.2444 to the greenback, or 80.36 U.S. cents, weaker than
Tuesday's close of C$1.2374, or 80.81 U.S. cents.
    The price of oil, a key Canadian export and a main currency
driver, has risen more than 35 percent since hitting near
six-year lows in January, but retreated on Wednesday as analysts
speculated that a recent rally was overblown. 
     Minutes of the latest Fed meeting will be released later on
Wednesday and investors will be search for clues as to when the
central bank will start hiking interest rates. Currently,
markets are mostly expecting the first hike early in the second
half of this year. 
    Canadian government bond prices were mixed across the
maturity curve, but the two-year was up half a
Canadian cent to yield 0.454 percent, and the benchmark 10-year
 rose 17 Canadian cents to yield 1.488 percent.

 (Editing by Meredith Mazzilli)