CANADA FX DEBT-C$ weakens as Fed uncertainty keeps investors at bay
* C$ at C$1.0302 against U.S. dollar * Canadian retail sales rose 0.6 percent in July * Bond prices rise across the curve By Leah Schnurr TORONTO, Sept 24 (Reuters) - The Canadian dollar weakened on Tuesday as the currency was kept in a narrow range by uncertainty over the direction of the Federal Reserve's economic stimulus plans, while in-line domestic retail sales failed to give the loonie much support. The dollar briefly hit a session high after data showed Canadian retail sales rose 0.6 percent, in line with economists' expectations in July, but the currency quickly cut gains. The improvement in sales reversed a drop posted the month before. After last week's market-surprising decision from the Federal Reserve to hold the pace of its bond-buying program steady, investors have sought insight from comments from several Fed policymakers over the last few days. Influential New York Fed President William Dudley was the latest on Tuesday, saying he wouldn't rule out a reduction in Fed bond-buying later this year. "It's a little bit listless," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets. "The (Fed) speakers are providing a few clues to the future direction of tapering, but all told, it's a pretty narrow range." Until there is more robust economic data or a change in monetary policy on either side of the border, it will be difficult for the loonie to make big moves, said Mikolich. The Canadian dollar ended at C$1.0302 to the U.S. dollar, or 97.07 U.S. cents, weaker than Monday's session close of C$1.0285, or 97.23 U.S. cents. The Fed is currently buying $85 billion in bonds a month to keep borrowing costs low and prop up the economic recovery. The Canadian dollar touched a three-month high in the wake of the Fed's decision to stand pat, but has since pulled back from that. "We had a pretty sharp adjustment post-Fed," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada. "I think people will get comfortable with the idea that they linked this to a change in their forecasts. I don't think expectations will be built up as much for the October meeting for the Fed." A busy schedule of Fed speakers throughout the week is likely to hold the market's attention. Prices for Canadian government bonds were higher across the maturity curve, with the two-year bond edging up 1/2 a cent to yield 1.208 percent. The benchmark 10-year bond rose 41 Canadian cents to yield 2.599 percent.
© Thomson Reuters 2017 All rights reserved.