CANADA FX DEBT-C$ weaker after four-day gain; focus turns to Fed

Thu Sep 12, 2013 10:11am EDT
 
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* C$ at C$1.0332 vs US$, or 96.79 U.S. cents
    * Chance of less stimulus at Fed meeting causes CAD caution
    * C$ gains against Aussie after weak Australian jobs data

    By Alastair Sharp
    TORONTO, Sept 12 (Reuters) - The Canadian dollar weakened in
early trade on Thursday after a four-session advance versus the
U.S. dollar, with investors turning their attention to a U.S.
Federal Reserve meeting next week that could hurt the loonie's
prospects.
    The Canadian currency broke through its 100-day moving
average late on Wednesday, but its recent gains against the
greenback were beginning to falter. 
    "It looks like the market is just not paying attention to
the Fed next week," said John Curran, senior vice president at
CanadianForex. "If the Fed doesn't taper next week, they will
next month."
    A reduction in the size of the Fed's monthly bond-buying
would likely lead to an appreciation in the greenback, which
would mean a weaker Canadian dollar versus the U.S. dollar.
    At 9:35 a.m. (1335 GMT) the Canadian dollar was
trading at C$1.0332 to the greenback, or 96.79 U.S. cents,
compared with C$1.0315, or 96.95 U.S. cents, at Wednesday's
North American close.
    The Canadian currency made strong gains against its
commodity-linked cousin the Australian dollar after a
weak jobs report in that country suggested its central bank
might not be done cutting rates. 
    "Today, the Canadian dollar is not the story, when people
turn their attention to it they will see that it is mispriced
right now and start selling it," Curran said, adding the
currency would likely trade as weak as C$1.0450 by some time
next week.
    Prices for Canadian government bonds were higher across the
curve, with the two-year bond up 5 Canadian cents to
yield 1.270 percent and the benchmark 10-year bond 
rising 29 Canadian cents to yield 2.748 percent.