CANADA FX DEBT-C$ closes lower after U.S. Fed minutes

Wed Jul 14, 2010 4:53pm EDT
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* C$ ends at 96.70 U.S. cents

* U.S. Fed outlook pushes C$ lower

* Bonds flat to slightly higher (Updates to close, recasts, adds quotes)

By Jennifer Kwan

TORONTO, July 14 (Reuters) - The Canadian dollar ended lower against its U.S. counterpart on Wednesday after a cautious assessment from the U.S. Federal Reserve fueled concern about economic recovery.

In the minutes of a policy meeting released on Wednesday afternoon, the U.S. central bank sparked concern by suggesting additional measures may be needed if an already softening economic outlook were to take a turn for the worse. [ID:nN14148574]

The assessment sparked jitters on financial markets and helped to push down the price of oil, a key Canadian export, as well as pressure U.S. stocks, typically a barometer of risk appetite. [O/R] [.N]

"I sense that the dovish tone may have caused a bit of concern on the part of investors, so we're seeing now more of a risk aversion trade with Treasuries higher and risk assets such as the Canadian dollar being sold off," said Millan Mulraine, economics strategist at TD Securities.

"The fact that they thought about (additional measures to boost the economy), injected it as part of the discussion ... does suggest that there perhaps might be a chance they can do it if economic conditions aren't sufficient."   Continued...