CANADA FX DEBT-C$ resumes climb as oil, equities support

Tue Mar 16, 2010 8:08am EDT
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 * C$ up at C$1.0168 to the US$, or 98.35 U.S. cents
 * Bonds weaker ahead of Fed rate decision
 By Jennifer Kwan
 TORONTO, March 16 (Reuters) - The Canadian dollar resumed
its march higher against the U.S. currency on Tuesday, hovering
near its 20-month highs, bolstered by firmer oil and equity
 Oil held steady above $80 a barrel in a cautious market
ahead of an OPEC meeting and monetary policy moves expected
from the world's top two oil consumers, the United States and
China. [O/R]
 Also supporting the Canadian dollar's move higher were
world stocks, which rose on Tuesday ahead of the U.S. central
bank meeting. [MKTS/GLOB]
 The Federal Open Market Committee holds a one-day meeting
on Tuesday where it is expected to reiterate its vow to keep
interest rates very low for an "extended period."
 While the Fed is expected to hold rates steady, the market
is looking for any hints about the Fed's assessment of the
economic outlook, said Firas Askari, head of foreign exchange
trading at BMO Capital Markets.
 "Most scenarios still point for a continued stronger
Canadian dollar. It's just a matter of how quickly and how
crowded the trade is," said Askari, noting trade is crowded
because "everybody has jumped on board."
 "You can still expect to see some sort of long Canadian
dollar squeeze. But we haven't seen it yet," he said.
 At 7:38 a.m. (1138 GMT), the Canadian dollar was at
C$1.0168 to the U.S. dollar, or 98.35 U.S. cents, up from
Monday's close at C$1.0197 to the U.S. dollar, or 98.07 U.S.
 The Canadian dollar's move higher came after it tipped
lower against the U.S. currency on Monday as investors took a
break after an 11-day stretch of gains.
 Canadian bond prices were largely flat to slightly lower on
Tuesday, mimicking moves in the bigger U.S. Treasury market
where prices slipped in Europe on caution before the Fed's
policy decision later in the day. [US/]
 The two-year government bond CA2YT=RR edged 2 Canadian
cents lower to C$99.87 to yield 1.570 percent, while the
10-year bond CA10YT=RR slipped 16 Canadian cents to C$101.85
to yield 3.513.
 (Reporting by Jennifer Kwan)