REFILE-CANADA FX DEBT-C$ gets boost from upbeat Fed statement

Wed Sep 23, 2009 3:15pm EDT
 
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 (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]