CANADA FX DEBT-C$ steady as focus stays riveted on Fed

Fri Nov 15, 2013 11:01am EST
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* C$ at C$1.0472 vs US$, or 95.49 U.S. cents
    * Canada manufacturing sales rise 0.6 pct in Sept
    * Bond yields mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, Nov 15 (Reuters) - The Canadian dollar weakened
modestly against the greenback on Friday as comments by U.S.
Federal Reserve Chair nominee Janet Yellen offered no clear path
ahead for the loonie.  
    At a hearing on Thursday on her nomination to head the Fed,
Yellen defended the U.S. central bank's steps to spur economic
growth and called efforts to boost hiring an "imperative".
    The remarks were seen by markets as offering reassurance
that the Fed's economic stimulus efforts will continue, but her
comments also contained few surprises, leaving the Canadian
dollar without a catalyst to go higher.
    "Overall, the take away is it signaled continuity at the
Fed," said Greg Moore, FX strategist at TD Securities in
    "(Yellen) did sound a little bit more dovish, but she
sounded almost exactly like Bernanke in a lot of what she was
saying, so a new Fed chair that is essentially an extension of
Bernanke policy doesn't signal that much for QE policy."
    The Canadian dollar was at C$1.0472 to the
greenback, or 95.49 U.S. cents, slightly weaker than Thursday's
close of C$1.0468, or 95.53 U.S. cents. 
    The loonie will likely trade in a narrow band for the
session, in a range between C$1.05 and C$1.0450, Moore said.
    The Canadian dollar briefly jumped higher after data showed
that strong auto and food sales boosted Canadian manufacturing
sales by 0.6 percent in September, more than economists had
forecast and putting sales at the highest level since June 2012.
    But the gain was short-lived, with market focus quickly
returning to the Fed. 
    "Central banks have a stranglehold on forex markets
currently and I do not see that situation changing any time
soon," said Dean Popplewell, chief currency strategist at OANDA
in Toronto.
    While continued accommodative policy from the Fed should
support the loonie, uncertainty over the timing of the wind-down
of stimulus is keeping the currency in a tight range for now,
said Popplewell. 
    A longer timetable for reducing quantitative easing could
boost risk-appetite in the market, ultimately benefiting the
Canadian dollar. 
    Canadian bond yields were mostly lower across the maturity
curve, with the two-year bond off 2 Canadian cents to
yield 1.117 percent, while the benchmark 10-year bond
 slipped 8 Canadian cent to yield 2.565 percent.