CANADA FX DEBT-C$ softens as investors focus on the Fed

Tue Jun 18, 2013 4:47pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ at C$1.0210 vs US$, or 97.94 U.S. cents
    * Markets hope for Fed monetary policy clarity
    * U.S. house starts up less than expected; U.S. CPI climbs
    * Bond prices mixed

    By Solarina Ho
    TORONTO, June 18 (Reuters) - The Canadian dollar retreated
against a broadly stronger U.S. dollar on Tuesday as investors
braced for news on where the U.S. Federal Reserve will take
monetary policy.
    Markets have been jittery in recent weeks on speculation the
Fed could start winding down stimulus measures soon, and they
are looking to Fed chief Ben Bernanke's news conference on
Wednesday, at the end of the U.S. central bank's two-day federal
open market committee (FOMC) meeting, for more clarity.
    "It's very quiet. Everybody's caught in pre-FOMC concerns,"
said Mark Chandler, head of Canadian fixed-income and currency
strategy at RBC Capital Markets.
    "Most people are looking for some words of comfort from
Bernanke. What he's going to do is simply be clear about the
process it takes and how long it might take from taper to an
eventual rate increase."
    The Canadian dollar finished its North American session at
C$1.0210 versus the greenback, or 97.94 U.S. cents, weaker than
Monday's close of C$1.0177, or 98.26 U.S. cents. It was mixed
against other major currencies.
    There was no Canadian economic data released on Tuesday.
South of the border, U.S. consumer prices rose in May and a
gauge of underlying price pressures showed signs of stabilizing
after a long decline, which might have comforted Fed
policymakers, who would like to see stronger inflation.
    Also, U.S. housing starts rose less than expected in May,
likely due to labor and material constraints, though the overall
trend was consistent with a recovering housing market. 
    Chandler said the U.S. numbers were slightly below
expectations, but did not have much influence on the market as
investor attention was centered on the Fed.
    New Bank of Canada Governor Stephen Poloz will give his
first official speech on Wednesday. While the speech is not
expected to dominate attention, the market will keep an eye on
the governor's language for direction on the central bank's
    Government bond prices were mixed, with the two-year bond
 shedding half a Canadian cent to yield 1.114 percent,
and the benchmark 10-year bond dipping 2 Canadian
cents to yield 2.158 percent. Longer maturities rose.