CANADA FX DEBT-C$ little changed as markets await U.S. Fed

Mon Mar 16, 2015 9:43am EDT
 
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* Canadian dollar at C$1.2778 or 78.26 U.S. cents
    * Bond prices mostly higher across the maturity curve

    By Leah Schnurr
    OTTAWA, March 16 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday as investors were wary
of taking aggressive bets ahead of a U.S. Federal Reserve
decision and major domestic economic data later in the week.
    Despite lower oil prices on Monday, the loonie managed to
hold its ground, gaining support from profit-taking in the U.S.
dollar.
    Investors were focused on whether the Federal Reserve, in
its policy announcement on Wednesday, would drop its pledge to
be "patient" in considering interest rate increases.
 
    "If the Fed does remove the 'patient' language at
Wednesday's meeting, it'll increase the probability that the
first rate hike is June," said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    "Essentially we'll see further upward pressure on U.S.
dollar-Canadian dollar, and I don't think the C$1.28 handle will
be able to hold for too long."
    The Canadian dollar was at C$1.2778 to the
greenback, or 78.26 U.S. cents, modestly stronger than Friday's
close of C$1.2790, or 78.19 U.S. cents.
    Markets also face a busy economic calendar at home,
culminating in February inflation and January retail sales
reports on Friday.
    Depending on what the Fed does, though, the data could take
a backseat to the policy announcement, Smith said.
    "The loonie will most likely follow the direction of oil and
broader U.S. dollar movements as we move closer to Wednesday,"
he said.
    Canadian government bond prices were mostly higher across
the maturity curve, although the two-year was down
3.8 Canadian cents to yield 0.573 percent. The benchmark 10-year
 was up 52 Canadian cents to yield 1.422 percent.

 (Editing by Lisa Von Ahn)