CANADA FX DEBT-Canadian dollar edges lower after BoC, Fed

Wed Dec 16, 2009 3:55pm EST
 
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 * C$ dips to 94.19 U.S. cents
 * Fed keeps rates near zero, voices some optimism
 * BoC downplays talk of a housing bubble
 (Updates to late afternoon with price, central bank activity)
 TORONTO, Dec 16 (Reuters) - The Canadian dollar edged lower
against the U.S. currency on Wednesday after the U.S. Federal
Reserve kept interest rates near zero, while the Bank of Canada
downplayed talk of a housing bubble.
 The Fed rate decision and a speech by Bank of Canada
Governor Mark Carney were the events of the session, but
neither managed to sway the Canadian dollar out of its recent
ranges.
 The Fed voiced guarded optimism that the battered U.S. job
market was improving, but it repeated a vow to keep interest
rates extraordinarily low for "an extended period."
[ID:nN16119711]
 In a speech addressing concerns of an overheated housing
market, Carney repeated that Canadian household debt has risen
sharply relative to income but said the risks to the financial
system are small and do not warrant an early interest rate hike
by the bank. [ID:nN1697463]
 "There was not a whole lot of reaction for either him or
the (Fed). We're still stuck in a range for Canada," said Shaun
Osborne, chief currency strategist at TD Securities.
 At 3:40 p.m. (1840 GMT), the Canadian dollar was at
C$1.0617 to the U.S. dollar, or 94.19 U.S. cents, down slightly
from C$1.0614 to the U.S. dollar, or 94.22 U.S. cents, at
Tuesday's close.
 Canadian short-term bonds were lower, partly because stock
markets held strong gains, suggesting risk appetite was up.
 The two-year government bond CA2YT=RR was down 7 Canadian
cents to C$99.86 to yield 1.323 percent, while the 10-year bond
CA10YT=RR was up 9 Canadian cents to C$102.86 to yield
3.3.394 percent.
 (Reporting by Ka Yan Ng; editing by Rob Wilson)