CANADA FX DEBT-C$ strengthens at prospect of U.S. Fed tapering
* C$ at C$1.0447 vs US$, or 95.72 U.S. cents * Fed minutes say tapering could begin in next few months * Bernanke says Fed will maintain monetary policy as long as necessary * Poloz makes parliamentary appearance, dovish comments expected By Solarina Ho TORONTO, Nov 20 (Reuters) - The Canadian dollar outperformed major currencies and held on to gains against the U.S. dollar on Wednesday after U.S. Federal Reserve minutes suggested the Fed could scale back its bond buying in the next few months if the economy improves enough. The greenback was under pressure earlier following indications from the Fed that it would maintain its ultra-loose monetary policy for as long as necessary. The minutes from the Fed's Oct. 29-30 policy meeting also showed officials said any move would depend on evidence the economy was growing adequately. Fed officials will next meet on Dec. 17-18. "We're pretty much unchanged on the day. The Fed minutes provided nothing new for us," said John Curran, senior vice president at CanadianForex. "Tapering is going to be the major event that people are gearing towards... People will be watching U.S. data with renewed interest heading into early next year." A gauge of U.S. consumer spending rose more than expected in October, 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 finished the North American session at C$1.0447 versus the U.S. dollar, or 95.72 U.S. cents, stronger than Tuesday's North American close at C$1.0471, or 95.50 U.S. cents. In a speech late Tuesday, Fed Chairman Ben Bernanke said 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. Bank of Canada Governor Stephen Poloz will be making a parliamentary appearance after markets close on Wednesday, which could provide some direction for the Canadian dollar. "The market's prepared for some more dovish comments out of Poloz. I don't foresee a great deal happening after his speech, but this is where surprises could come from," said Curran. Last month, the central bank surprised markets with a shift in policy, dropping any mention of eventual increases in rates following 18 months of warnings that borrowing costs will one day rise. Curran said the currency was trapped in a range and that the market will next be eyeing Canadian retail sales and CPI data on Friday. Canadian bond prices were mostly lower across the maturity curve, but the two-year bond was up 2 Canadian cents to yield 1.117 percent. The benchmark 10-year bond was down 50 Canadian cents to yield 2.629 percent.
© Thomson Reuters 2016 All rights reserved.