CANADA FX DEBT-C$ steady as investors look ahead to Fed
(Adds comments, closing figures) * Canadian dollar at C$1.2317 or 81.19 U.S. cents * Bond prices higher across the maturity curve OTTAWA, June 15 (Reuters) - The Canadian dollar was little changed against the greenback on Monday as weak domestic economic data was offset by softness in the greenback, while market focus shifted to the U.S. Federal Reserve's policy meeting this week. Canadian factory sales fell a much more-than-expected 2.1 percent in April due to lower sales of food and aerospace products, data showed. It was the third decline in factory sales in four months. The U.S. dollar dipped as the euro erased earlier losses, with calm returning to markets following initial shock over the failure of debt negotiations on Sunday between Greece and its creditors. "The (currency) markets are pretty much ignoring the headlines on Greece for now because you really don't know which way things are going," said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets. The Canadian dollar closed at 1.2317 to the greenback, or 81.19 U.S. cents, little changed from the Bank of Canada's official close of C$1.2311, or 81.23 U.S. cents, on Friday. The currency traded between C$1.2301 and C$1.2361 during the session. The Fed is expected to leave interest rates unchanged this week, but investors will look for a clear signal of when it will start to raise rates from their current historic lows. Analysts said markets may trade cautiously until the Fed's policy statement on Wednesday. The market expects the Canadian dollar to weaken amid a more optimistic Fed tone, but Canadian data will also drive direction. "If we get weak wholesale trade on Wednesday, and if retail sales is weak, that will spur a little more talk of a potential rate cut because you'll be tracking growth below what Bank of Canada was looking at in April," Reitzes said. Canadian government bond prices were higher across the maturity curve, with the two-year price up 5 Canadian cents to yield 0.626 percent and the benchmark 10-year rising 35 Canadian cents to yield 1.769 percent. The Canada-U.S. two-year bond spread was -8 basis points, while the 10-year spread was -58.9 basis points. (Reporting by Solarina Ho and Leah Schnurr; Additional reporting by Alastair Sharp; Editing by Meredith Mazzilli and Peter Galloway)
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