CANADA FX DEBT-C$ sidelined ahead of Fed decision
(Adds details, fresh comment, closing figures) * Canadian dollar at C$1.2776 or 78.27 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, March 17 (Reuters) - The Canadian dollar traded near flat against the greenback on Tuesday despite another fall in U.S. crude prices and weak domestic data, as investors looked ahead to the Federal Reserve's latest monetary policy decision and guidance. U.S. crude settled at $43.46 a barrel, as the market braced for a 10th straight week of record oil inventories. Canada is a major oil exporter and the economy has been feeling the impact of a dramatic plunge in prices. Data earlier on Tuesday showed Canadian manufacturing sales fell more than anticipated in January, hit by a drop in petroleum and coal product sales. The industry has seen sales fall 35 percent in the last seven months alongside the fall in crude prices. "It's interesting that the Canadian dollar didn't react more given oil hit another marginal new low and manufacturing was, at least in my mind, clearly softer than expected," said Greg Moore, senior currency strategist at RBC Capital Markets. "That does show pretty clearly that markets might be thinner first of all because of the March break holidays, and that the focus is really on the Fed tomorrow. It's typical to see consolidation ahead of a big event." The Canadian dollar ended the session at C$1.2776 to the greenback, or 78.27 U.S. cents, little changed from Monday's finish at C$1.2780, or 78.25 U.S. cents. The U.S. dollar fell broadly on concerns that the currency's recent surge could prompt the Federal Reserve to take a more cautious stance on interest rate hikes this year. The Fed on Tuesday began a two-day meeting where policymakers will consider whether the time is right for the U.S. central bank to strike a promise to be "patient" from its statement in deciding when to raise interest rates. The Fed will release its statement at 1400 EDT (1800 GMT) on Wednesday. The market has been widely expecting the U.S. central bank to hike rates this summer or fall, which would mark a clear divergence from many other central banks around the world. Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London, said many are anticipating the Fed will remove the word "patient" from its forward guidance, but added that recent U.S. data has made that "less of a slam dunk" than before. Looking ahead, Canadian retail sales for January and inflation data for February due on Friday will be the next key economic data that could provide further direction for the market. Canadian government bond prices were mixed across the maturity curve, with the two-year off 1.5 Canadian cents to yield 0.541 percent and the benchmark 10-year rising 16 Canadian cents to yield 1.414 percent. (Editing by Jonathan Oatis and G Crosse)
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