CANADA FX DEBT-C$ ticks up on weak USD, firm resources

Tue Dec 14, 2010 8:23am EST
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 * C$ slightly higher at 99.40 U.S. cents
 * Canadian bond prices flat to weaker across curve
 By Jennifer Kwan
 TORONTO, Dec 14 (Reuters) - The Canadian dollar ticked
higher but treaded in a tight range Tuesday morning, supported
by a weak U.S. dollar and firmness in commodity prices.
 The price of oil, a key Canadian export, held steady above
$88 a barrel, and gold prices rose beyond $1,400 an ounce,
lifted in part by a weak greenback. [O/R] GOL/]
 The U.S. dollar's recent decline has coincided with a
pullback in U.S. Treasury yields and after Moody warned it
could move a step closer to cutting the U.S. triple-A credit
rating if a tax and unemployment benefits package becomes law.
[FRX/] [ID:nN13105751]
 "People are putting it down to concerns about the U.S.
deficit and U.S. credit quality, and the fiscal easing that is
falling into the place in the U.S. as being seen in a less
positive light ... it means that the U.S. has a bigger deficit
to fund and its credit is being called into question," said
Adam Cole, global head of FX strategy at RBC Capital Markets
in London.
 "The fact that (U.S.) dollar weakness does tend to spill
over into high commodity prices may be offering Canada some
support versus the U.S. dollar in particular," he added.
 Traders also said investors were trimming positions ahead
of a U.S. Federal Reserve policy meeting later Tuesday. [FRX/]
 At 7:55 a.m. (1255 GMT), the Canadian dollar CAD=D4
stood at C$1.0060 to the U.S. dollar, or 99.40 U.S. cents, up
slightly from C$1.0077 to the U.S. dollar, or 99.24 U.S.
cents, at Monday's finish.
 Cole said he is eyeing technical levels of C$1.0140 to the
U.S. dollar, a key Canadian dollar support point, and just
below parity to the U.S. dollar for domestic currency
 Canadian bond prices were largely flat to lower across the
curve, tracking U.S. Treasuries prices that were steady in
anticipation of U.S. data and the Fed meeting.
 The interest-rate sensitive two-year bond CA2YT=RR
sagged 3 Canadian cents to yield 1.678 percent, while the
10-year bond CA10YT=RR fell 10 Canadian cents to yield 3.249
  (Reporting by Jennifer Kwan; editing by Jeffrey Benkoe)