CANADA FX DEBT-C$ firms as investors position ahead of Fed minutes, data

Tue Aug 18, 2015 4:49pm EDT
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(Adds strategist comment, details, closing figures)
    * Canadian dollar ends at C$1.3056 or 76.59 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, Aug 18 (Reuters) - The Canadian dollar drifted
higher against its U.S. counterpart on Tuesday as market
participants positioned themselves ahead of the release of
minutes of the Federal Reserve's latest policy meeting and
domestic economic data at the end of the week.
    The Fed minutes are set for release on Wednesday and
investors will be parsing for clues on how soon the U.S. central
bank will raise interest rates. Many expect a move this year,
possibly as early as September.
    "I don't think the market is looking for the Fed to be too
aggressive tomorrow. They'll probably stay the course and buy
themselves the option to see a couple of more numbers," said
Darcy Browne, managing director, foreign exchange sales at CIBC
World Markets.
    "For the short term, it looks like in the absence of
anything else, positioning is probably the most important
    The Canadian dollar, which was stronger than many
of its counterparts, finished at C$1.3056 to the greenback, or
76.59 U.S. cents, firmer than the Bank of Canada's official
close of C$1.3085, or 76.42 U.S. cents, on Monday.
    The currency was range-bound, trading between C$1.3040 and
    Browne still expects the loonie to weaken over the medium to
longer term, trading between C$1.33 to C$1.35 in the coming
    The price of oil, a major Canadian export, stayed near
6-1/2-year lows but settled up 1.8 percent above $42 a barrel,
which also helped the loonie's modest lift. 
    Investors are also awaiting Canadian inflation and retail
sales data due on Friday. 
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year off 2 Canadian
cents to yield 0.417 percent and the benchmark 10-year
 sliding 25 Canadian cents to yield 1.398 percent.
    The Canada-U.S. two-year bond spread widened to -30.5 basis
points, while the 10-year spread widened to -79.6 basis points.

 (Reporting by Solarina Ho; Editing by Peter Galloway and James