CANADA FX DEBT-C$ picks up on Fed hopes

Tue Aug 28, 2012 8:43am EDT
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* C$ climbs to C$0.9878 vs US$, or $1.0124
    * Bond prices mixed across the curve
    * All eyes on Bernanke on Friday

    By Claire Sibonney
    TORONTO, Aug 28 (Reuters) - The Canadian dollar edged up
slightly against its U.S. counterpart on Tuesday ahead of a key
speech by U.S. Federal Reserve Chairman Ben Bernanke on Friday.
    Investors were cautious however about placing big bets in
the run-up to a meeting of central bankers at Jackson Hole,
Wyoming, beginning on Friday.
    Any hints from Bernanke that policymakers are close to
introducing more U.S. monetary easing would be likely to weigh
on the U.S. dollar.
    "As we head into the end of the week in Jackson Hole ... the
market is starting to shift focus back to QE3," said Matt
Perrier, a director of foreign exchange sales at BMO Capital
    "I just think the U.S. dollar is generally being sold on any
    Bernanke is expected to sustain expectations for a third
round of quantitative easing, though he could keep markets
guessing about the timing of such an action. 
    Also in focus will be Friday's Canadian gross domestic
product figures, which are expected to be soft.
    At 8:29 a.m. (1229 GMT), the Canadian dollar traded
at C$0.9878 against the U.S. dollar, or $1.0124, firmer than
Monday's North American session close at C$0.9908, or $1.0093.
    Earlier, the Canadian dollar broke through key short-term
resistance against the greenback around C$0.9880-85, noted
Perrier. The next major barrier is eyed around C$0.9850.
    Near-term support for the Canadian dollar is seen around
    "Dollar/Canada has just been very much sidelined amid
movements in other currencies," said Perrier.
    "I think the Canada story is more on a cross-related basis
than it is on a straight dollar/Canada basis."
    The Canadian dollar on Tuesday hit a 2-1/2-month peak
against the Australian dollar and a near one-week high against
the euro.
    Canadian bond prices were little changed across the curve,
with the two-year bond down 2 Canadian cents to yield
1.167 percent and the benchmark 10-year bond up 2
Canadian cents to yield 1.804 percent.