CANADA FX DEBT-All eyes on Bank of Canada as C$ strengthens
* C$ at C$1.0374 to US$, or 96.39 U.S. cents * Bank of Canada rate decision due at 10:00 a.m. EDT * Fed tapering debate lurks in background By Alastair Sharp TORONTO, May 29 (Reuters) - The Canadian dollar was slightly stronger against its U.S. counterpart in early trading on Wednesday, gaining some ground ahead of a Bank of Canada rate decision. The central bank, in an announcement due at 10:00 a.m. EDT(1400 GMT), is unanimously expected to hold its benchmark interest rate steady, with economists focused on whether outgoing Governor Mark Carney retains the bank's slightly hawkish tone. "The very broad and strong consensus is that the Bank of Canada will essentially hold the line on everything they said in previous statements," said Greg Moore, currency strategist at TD Securities. The outside risk of a more neutral stance would likely pressure the loonie, as Canada's currency is colloquially known. At 8:59 a.m. (1259 GMT) the Canadian dollar was trading at C$1.0374 to the greenback, or 96.39 U.S. cents, compared with C$1.0395, or 96.20 U.S. cents, at Tuesday's North American close. Once the Bank of Canada news is out, traders expect the focus to return to the U.S. Federal Reserve and any hints it will consider slowing the pace of its asset-buying program. Expectations for a tapering of the stimulus program have helped yields on Treasuries spike, with Canadian government debt also rising. The two-year bond was up half a Canadian cent early on Wednesday to yield 1.071 percent, while the benchmark 10-year bond rose 17 Canadian cents to yield 2.059 percent.
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