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

Thu Sep 12, 2013 4:53pm EDT
 
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* C$ at C$1.0325 vs US$, or 96.85 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 ended
slightly weaker on Thursday after a four-session advance against
the U.S. dollar, with investors turning their attention to a
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. 
"If the Fed doesn't taper next week, they will next month,"    
said John Curran, senior vice president at CanadianForex. 
    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.
    Ahead of the Fed, the pair will likely trade in a narrow
C$1.03-C$1.3050 range, TD Securities macro strategist Mazen Issa
said. 
    "Until we get some clarity from the Fed next week, I think
we're bound to see little price action in the dollar/Canadian,"
he said. 
    The Canadian dollar ended the day at C$1.0325 to
the greenback, or 96.85 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 mixed, with the
two-year bond up 2 Canadian cents to yield 1.283
percent and the benchmark 10-year bond flat to yield
2.785 percent.