REFILE-CANADA FX DEBT-C$ gets boost from upbeat Fed statement
(Repeats to fix byline)
* C$ rises to as high as 93.76 U.S. cents after Fed
* Fed says U.S. economy in recovery after downturn (Updates with Fed details, adds quote)
By Jennifer Kwan
TORONTO, Sept 23 (Reuters) - Canada's currency ticked higher against the U.S. dollar on Wednesday afternoon after the Federal Reserve said a U.S. economic recovery is underway with activity picking up following a severe downturn.
The Canadian dollar, which had been slightly weaker ahead of the U.S. central bank's announcement climbed as high as C$1.0666 to the U.S. dollar, or 93.76 U.S. cents. The overnight high was at 93.78 U.S. cents.
"The U.S. dollar is generally weaker against everything. Bond markets are up, equity markets are up," said Sal Guatieri, senior economist BMO Capital Markets.
"The Fed will keep the monetary pumps at full throttle for another few months. Markets are rejoicing -- all markets except the U.S. dollar."
The Federal Reserve on Wednesday said that the U.S. economy was in recovery after a severe downturn and decided to slow purchases of mortgage debt to extend that program's life until the end of next March. [ID:nN23390829]
At 3:05 p.m. (1905 GMT), the currency was at C$1.0688 to the U.S. dollar, or 93.56 U.S. cents, slightly higher from Tuesday's finish at C$1.0691 to the U.S. dollar, or 93.54 U.S. cents.
After the Fed, the focus now turns to a meeting of the Group of 20 nations later this week. Among major issues expected to be discussed will be the need to examine strategies for withdrawing economic stimulus measures. [ID:nLH78576]
Canada's currency was lower against the U.S. dollar on Wednesday morning after a Bank of Canada official repeated the central bank's warning that the strong Canadian dollar is a risk to growth.
In the prepared text of a speech, Deputy Governor David Longworth did not waver from language used in the central bank's Sept. 10 statement that "persistent strength in the Canadian dollar remains a risk to growth and to the return of inflation to target, and that the Bank retained considerable flexibility in the conduct of monetary policy at low interest rates." [ID:nN23387254]
Separately, Bank of Canada Governor Mark Carney said late on Tuesday that Canada's economy has started the slow climb to recovery but only because of the emergency measures taken by the government and central bank, with business activity still lagging. [ID:nN22355648]
Canadian bond prices were little changed, but the long end followed the U.S. Treasury market where bonds erased losses to trade near flat after the Fed decision reiterated its promise to keep interest rates low for an extended period. [ID:nN23409345]
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