CANADA FX DEBT-C$ firms as Bernanke remarks weighs on US dollar

Wed Nov 20, 2013 9:51am EST
 
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By Solarina Ho
    TORONTO, Nov 20 (Reuters) - The Canadian dollar firmed
against the U.S. dollar on Wednesday, as the greenback was
weakened by indications from the U.S. Federal Reserve that it
would maintain its ultra-loose monetary policy for as long as
necessary.
    Fed Chairman Ben Bernanke said in a speech late Tuesday that
despite an improved U.S. economy, officials want proof of
sustained job growth before the central bank scales back its
bond-buying stimulus. Bernanke said interest rates were likely
to remain near zero for a considerable time after the asset
purchases end. 
    "I think the timeline is, any rate hike before 2016 seems to
be very unlikely in his mind. And you can feel that tapering is
something they want to do," said Charles St-Arnaud, economist
and currency strategist with Nomura Securities in New York.
    "Going forward, once we get tapering by the Fed, than we
should see the Canadian dollar depreciate."
    The Canadian dollar was trading at C$1.0447 versus
the U.S. dollar, or 95.72 U.S. cents at 9:34 a.m. (1434 GMT),
stronger than Tuesday's North American close at C$1.0471, or
95.50 U.S. cents.
     A gauge of U.S. consumer spending rose more than expected
in October as households bought a range of goods, suggesting
upside momentum in the economy early in the fourth quarter,
while inflation data showed an unexpected fall in consumer
prices in October. 
    "The Canadian dollar's only marginally stronger today ...
The data in the U.S. is roughly in line, or slightly better than
expected in terms of retail sales," said St-Arnaud.
    Canadian retail sales and CPI data are due on Friday.
    Canadian bond prices were mostly higher across the maturity
curve, with the two-year bond up 1 Canadian cent to
yield 1.123 percent, while the benchmark 10-year bond
 rising 5 Canadian cents to yield 2.560 percent.