CANADA FX DEBT-C$ firms on greenback weakness ahead of Fed

Wed Jun 24, 2009 7:58am EDT
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TORONTO, June 24 (Reuters) - The Canadian dollar rose against the U.S. dollar on Wednesday morning, lifted in part by a broadly weaker greenback on expectation the U.S. Federal Reserve will emphasize it is in no hurry to raise rates.

Many expect the U.S. central bank, in concluding its two-day meeting, to dampen expectations for interest rate increases in the near term. [FRX/] [ID:nN2374785]

That expectation, "tends to erode any support the dollar had been getting over the last little while from the greenshoots and the talk of inflation or early rate hikes," said David Watt, senior currency strategist at RBC Capital Markets.

"I think the Fed is going to beat that back with a heavy stick."

At 7:39 a.m. (1139 GMT), the Canadian dollar was at C$1.1473 to the U.S. dollar, or 87.16 U.S. cents, up from Tuesday's finish at C$1.1500 to the U.S. dollar, or 86.96 U.S. cents.

Investors will also be watching for any economic outlook from the Fed and changes in its program of Treasury purchases, added Watt.

The currency also drew support from firmness in global equity markets [MKTS/GLOB], typically a gauge of investors' appetite for risk, while U.S. stock index futures also pointed to a higher open. [ID:nN24141152]

Canadian bond prices were lower across the curve, following the U.S. Treasury market where longer-dated prices slipped on supply concerns and ahead of the Federal Reserve meeting. [ID:nLO697467] (Reporting by Jennifer Kwan; Editing by Theodore d'Afflisio)