CANADA FX DEBT-C$ slightly weaker after Fed forecast

Wed Mar 14, 2012 8:57am EDT
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* C$ at C$0.9912 vs US$, or $1.0088
    * More bullish Fed outlook boosts greenback
    * C$ hits year high vs Australian dollar
    * Bond prices lower across curve

    By Jon Cook	
    TORONTO, March 14 (Reuters) - The Canadian dollar slid
against the U.S. currency on Wednesday as Tuesday's
comments from the U.S. Federal Reserve on the economy and
banking sector continued to boost the greenback above its global
    Canada's role as America's largest trading partner helped it
outperform other commodities-linked currencies such as the
Australian and New Zealand dollars.	
    "The Canadian dollar is materially outperforming both the
Aussie and the Kiwi, which is what you typically see on days
when you get this pure (U.S.) dollar strength," said Adam Cole,
global head of foreign exchange strategy for Royal Bank of
    The Canadian dollar hit its strongest level against the
Australian currency this year, at one point firming to C$1.0353
to the Australian dollar. It hit a two-month peak
against New Zealand's dollar.	
    A report on Tuesday showed U.S. retail sales posted their
largest gain in five months in February, the latest data to
suggest the economic recovery is on a more solid footing.
    Acknowledging this trend, the Fed slightly upgraded its
outlook, expecting "moderate" growth over coming quarters and a
gradual decline in the unemployment rate, although it said the
jobless rate remained elevated. 	
    "The market seems to have read the (Fed) meeting as (U.S.)
dollar bullish and it's just carried on rallying," said Cole.	
    At 8:43 a.m. (1243 GMT), the Canadian dollar stood
at C$0.9912 versus the U.S. dollar, or $1.0088, down from
Tuesday's North American session close at C$0.9892 versus the
U.S. dollar, or $1.0109.	
    The Fed also said most of the largest U.S. banks passed
their annual stress test in a report that underscored the
recovery of the financial sector but called out a few laggards,
including Citigroup Inc. 	
    Cole said with no significant data until Friday's Canadian
manufacturing and U.S. industrial output numbers, the Canadian
dollar would hover within a range between a high at C$0.9842 and
a trough at just above parity with the U.S. dollar.	
    Canada's bond prices were lower across the curve, with the
two-year bond down 4 Canadian cents to yield 1.228
percent, while the 10-year bond fell 40 Canadian
cents to yield 2.114 percent.