CANADA FX DEBT-C$ trips as greenback gains footing

Mon Oct 4, 2010 9:35am EDT
 
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   * C$ slightly lower at 97.95 U.S. cents
 * Bonds follow U.S. Treasures higher
 By Jennifer Kwan
 TORONTO, Oct 4 (Reuters) - Canada's dollar slipped slightly
against the U.S. currency on Monday morning as the greenback
regained its footing following recent weakness on speculation
the U.S. Federal Reserve may further ease monetary policy.
 At 9:15 a.m. (1315 GMT), the currency CAD=D4 was at
C$1.0209 to the U.S. dollar, or 97.95 U.S. cents, after earlier
soaring as high as C$1.0180 to the U.S. dollar, or 98.23 U.S.
cents, its strongest since Aug. 6. On Friday, the currency
finished at C$1.0205 to the U.S. dollar, or 97.99 U.S. cents.
 The dollar rose on Monday, recovering earlier losses as
traders cut bets the currency will weaken, which have been
piling up on speculation the Federal Reserve may buy bonds to
support the economy in a process known as quantitative easing.
[FRX/]
 "There's been strong interest below C$1.02 from a corporate
base to buy U.S. dollar, said David Bradley, director of
foreign exchange trading at Scotia Capital, noting when the
currency trades below C$1.0190 to the U.S. dollar "we see
strong demand."
 "We've been in such a tight range in dollar/Canada recently
that I think the corporate base we have, non-exporter types and
especially some of our customers south of the border, are
looking to pick up U.S. dollars on any moves on extreme levels
of the range."
 Market watchers have said the Canadian dollar has been
recently stuck in a range between C$1.02 to C$1.03 to the U.S.
dollar.
 Investors will look to a string of economic data this week
for more direction, including U.S. reports on Monday such as
pending home sales, durable good orders and factory orders, all
for August. [ECONUS]
 Canadian government bond prices were flat to higher, along
with U.S. Treasury prices where debt prices climbed on the
broader prospect of quantitative easing by the U.S. central
bank. [US/]
 The two-year bond CA2YT=RR ticked 1 Canadian cent higher
to yield 1.369 percent, while the 10-year bond CA10YT=RR
added 13 Canadian cents to yield 2.780 percent.
 (Editing by Chizu Nomiyama)