CANADA FX DEBT-C$ pares gains after Fed, still off 3-week low on oil

Wed Oct 28, 2015 4:47pm EDT
 
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(Updates price action to official close)
    * Canadian dollar settles at C$1.3192, or 75.80 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, Oct 28 (Reuters) - The Canadian dollar ended
stronger against its U.S. counterpart on Wednesday on a surge in
crude oil prices, although gains were offset by the U.S. Federal
Reserve's message that a December interest rate hike was still
on the agenda.
    The U.S. central bank held rates steady as expected but
surprised investors with an overt reference to its December
meeting. 
    "In this circumstance, with the Fed seemingly trying to get
back in play, certainly you have to think in terms of the
relative policy stances that the Fed is closer to normalizing
interest rates compared to the Bank of Canada," said Mazen Issa,
senior foreign exchange strategist at TD Securities.
    The loonie, as the Canadian currency is colloquially known,
weakened to above C$1.32 to the greenback after the news, from
C$1.31 immediately before.
    It ended the day at C$1.3192, or 75.80 U.S. cents,, stronger
than Tuesday's official close of C$1.3266, or 75.38 U.S. cents.
    The commodity-linked currency had gained ahead of the Fed as
a bump in chronically weak oil prices provided support.
    U.S. crude prices settled up 6.3 percent at $45.94 a
barrel, while Brent added 5.18 percent to $49.19. 
    The Canadian dollar was outperforming all of its key
currency counterparts.
    Canadian government bond prices fell across the maturity
curve, with the two-year price down 10 Canadian cents
to yield 0.544 percent. The benchmark 10-year lost
58 Canadian cents to yield 1.482 percent.
    The Canada-U.S. two-year bond spread was -16.3 basis points,
and the 10-year spread was -61.8 basis points.
    

 (Editing by James Dalgleish and Tom Brown)