CANADA FX DEBT-C$ makes small gain as oil bounce fades, Fed eyed
(Adds analyst comment, updates prices to close) * Canadian dollar at C$1.3207, or 75.72 U.S. cents * Bond prices lower across the yield curve By Alastair Sharp TORONTO, Sept 19 (Reuters) - The Canadian dollar made a slight gain against its U.S. counterpart on Monday, paring a bigger boost as an oil-induced bounce faded and traders took a cautious approach to pending Japanese and U.S. central bank monetary policy decisions. The loonie, as Canada's currency is known, had bounced from a seven-week low hit on Friday as oil prices rebounded. But it lost momentum with oil settling off its highs on skepticism over Venezuela's bid to talk up a potential OPEC output freeze and on indications U.S. crude stockpiles rose last week. Currency strategists are bracing for interest rate decisions from both the Bank of Japan and the U.S. Federal Reserve on Wednesday. "We've got a bigger probability of seeing a shock that sends the U.S. dollar higher across the board as opposed to one that has the U.S. dollar weaken," said Scott Smith, a senior market analyst at Cambridge Global Payments. He put the chance the Fed hikes at 50 percent, much higher than the market is pricing in, given recent hawkish comments from the Fed's most influential policymakers. He added that even in the case of a hold, the U.S. dollar could rally if another dissenter appears or the central bank gives a brighter economic outlook. The Canadian dollar settled at C$1.3207 to the greenback, or 75.72 U.S. cents, slightly stronger than Friday's close of C$1.3214, or 75.68 U.S. cents. The currency's strongest level of the session was C$1.3135, while its weakest was C$1.3230. Speculators pared bullish bets on the Canadian dollar for the second straight week, Commodity Futures Trading Commission data showed on Friday. Canadian government bond prices were lower across the yield curve, with the two-year bond down half a Canadian cent to yield 0.584 percent and the benchmark 10-year losing 3 Canadian cents to yield 1.193 percent. Bank of Canada Governor Stephen Poloz will give a speech in Quebec City on Tuesday on the topic of "Living With Lower for Longer," followed by a press conference. Investors will be looking to see whether Poloz emphasizes the downbeat tone of the bank's most recent policy statement. Canadian inflation and retail sales data are due on Friday. The annual inflation rate is forecast to have edged up to 1.4 percent in August, while investors will be looking for signs that the federal government's new child benefit checks gave a boost to retail sales. (Additional reporting by Fergal Smith; Editing by W Simon and Dan Grebler)
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