CANADA FX DEBT-C$ touches 6-mth low; Fed hopes drive U.S. dollar run
* Canadian dollar at C$1.1108 or 90.03 U.S. cents * Bond prices rise across the maturity curve By Solarina Ho TORONTO, Sept 25 (Reuters) - The Canadian dollar slid to its weakest level in six months against its U.S. counterpart on Thursday, as the greenback powered higher on expectations that the Federal Reserve will likely end its bond-buying next month and begin raising the cost of borrowing next year. The U.S. dollar's winning streak, on track to be the longest since the early 1970s, comes as the Canadian dollar faces pressure at home, in particular, a series of dovish comments from the Bank of Canada. "Fresh lows in the Canadian dollar has been a long time coming. The U.S. dollar is an unstoppable machine at the moment," said Adam Button, a currency analyst at ForexLive, who said there was a tremendous amount of U.S. dollar demand as the market bet the Fed will hike interest rates, in contrast to Europe's monetary policy stance. The Canadian dollar finished Thursday's session at C$1.1108 to the U.S. dollar, or 90.03 U.S. cents, about a half cent weaker than Wednesday's close of C$1.1057, or 90.44 U.S. cents. It touched C$1.1128 during the session, it's softest level since late March. "In the context of what we're seeing in terms of some other currencies against the U.S. dollar, you can argue that it's actually holding in comparatively well," said Jeremy Stretch, head of foreign exchange strategy in London with CIBC World Markets. Stretch noted that the greenback was nonetheless susceptible to some profit-taking as the end of the month and quarter approaches. ForexLive's Button also said a report that Chinese central bank Governor Zhou Xiaochuan, an advocate of pro-market financial reforms, may lose his job in a reshuffling that follows internal battles over overhauling the economy, is also creating uncertainty in the market and hurting the Canadian dollar. "The bottom line is, the market doesn't have handle on what's happening of China, but there's a sense that change is coming," Button said. "And uncertainty is the enemy of a currency like the Canadian dollar and that's reflected in the six month low today." Canadian government bond prices were higher across the maturity curve, with the two-year rising 4.7 Canadian cents to yield 1.120 percent and the benchmark 10-year adding 42 Canadian cents to yield 2.152 percent. (Reporting by Solarina Ho; Editing by Meredith Mazzilli and Andrew Hay)
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