CANADA FX DEBT-Canada dollar firms before Fed, Carney speech

Wed Dec 16, 2009 10:00am EST
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 * C$ rises to 94.38 U.S. cents
 * Bond prices little changed
 * Bank of Canada Governor speech, Fed statement on tap
 TORONTO, Dec 16 (Reuters) - The Canadian dollar was firmer
against the U.S. currency on Wednesday morning, while
government bonds were little changed, as markets marked time
ahead of two key central bank events later in the day.
 Bank of Canada Governor Mark Carney will deliver a speech
in Toronto and the U.S. Federal Reserve will release its latest
policy statement. The market will be watching both for hints on
when the two central banks will start raising interest rates.
 Both the Fed and the Bank of Canada have said rates should
stay low for the next while. Recent strong economic data,
however, has raised concern about inflation and sparked
questions about whether the Fed will stick to its pledge.
 The Bank of Canada warned recently that household debt
poses an increased risk to the economy.
 "The bank has started to raise some concern about maybe
some asset bubbles, primarily real estate in Canada, as well as
a lower savings rate amongst the Canadian population," said
Firas Askari, head of foreign exchange trading at BMO Capital
 "This is by no means letting loose the hounds on hawkish
talk or higher rates immediately, but I think they're going to
have a hard time holding onto a stationary policy on rates past
the date they've given us in the summer."
 Carney's speech, "Current Issues in Household Finances", is
scheduled to begin at 1:05 p.m. (1805 GMT). The Fed policy
statement is due at 2:15 p.m. (1915 GMT).
 The Canadian currency firmed after data showed Canadian
manufacturing sales rose twice as much as expected in October
from September, jumping 2 percent on strength in the aerospace,
energy and auto industries. [ID:nN163200]
 At 9:40 a.m. (1440 GMT), the Canadian dollar was at
C$1.0595 to the U.S. dollar, or 94.38 U.S. cents, up from
C$1.0614 to the U.S. dollar, or 94.22 U.S. cents, at Tuesday's
 The two-year Canadian government bond CA2YT=RR was up 1
Canadian cent at C$99.94 to yield 1.281 percent, while the
10-year bond CA10YT=RR dipped 1 Canadian cent to C$102.76 to
yield 3.406 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)