CANADA FX DEBT-C$ surges as greenback battered by Fed statement
(Updates throughout with comments, closing figures and details) * Canadian dollar ends at C$1.2570, or 79.55 U.S. cents * Makes biggest one-day move since September 2011 * Early in session, C$ touched weakest since March 2009 * Bond prices mostly higher By Solarina Ho TORONTO, March 18 (Reuters) - The Canadian dollar rebounded from six-year lows against the greenback on Wednesday, making its biggest one-day move against the U.S. dollar since September 2011, after the Federal Reserve signaled a more cautious outlook for U.S. economic growth and slashed its projected interest rate path. The Fed removed the word "patient" from its language on interest-rate increases even though its more dovish forecast appeared to make a June rate hike less likely. It also acknowledged that inflation was running below expectations, weighed down in part by falling energy prices. The statement hammered the U.S. dollar. "The Fed's economic forecast is not necessarily negative, but isn't quite as optimistic as we were seeing back in December's meeting," said USForex currency strategist Lennon Sweeting, who is not expecting rate increase until at least the fourth quarter and said even a prediction of a September hike would be aggressive. "U.S. dollar strength remains intact. This is just a bump in road," Sweeting said. "Central banks have obviously been sparking a lot volatility in the market and this is just another example of that." The Canadian dollar, which had already begun strengthening notably ahead of the Fed statement, finished some 2 percent higher at C$1.2570 against the greenback, or 79.55 U.S. cents. It had closed at C$1.2785, or 78.22 U.S. cents, on Tuesday. Currency strategists said the greenback's drop was a good opportunity for U.S. dollar buyers to add to their positions. Earlier in the session, the Canadian dollar had touched C$1.2835, or 77.91 U.S. cents, its weakest level since March 2009, after data showed Canadian wholesale sales had the biggest drop in six years in January, a fall that far exceeded economists' expectations. Canadian government bond prices were mostly higher across the maturity curve, with the two-year up 9.5 Canadian cents to yield 0.489 percent and the benchmark 10-year climbing 92 Canadian cents to yield 1.319 percent. (Reporting by Solarina Ho; Editing by Peter Galloway)
© Thomson Reuters 2017 All rights reserved.