CANADA FX DEBT-C$ weakens in thin trade as oil slips, eye on Fed

Mon Apr 25, 2011 5:19pm EDT
 
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   * C$ dips to C$0.9546 from C$0.9537 on Thursday
 * Bond prices track U.S. Treasuries higher
 * Market awaits Bernanke speech on Wednesday
 * Next major Canadian data due Friday with Feb GDP
 By John McCrank
 TORONTO, April 25 (Reuters) - Canada's dollar edged lower
against the U.S. dollar on Monday in light trading as oil
prices wobbled and investors readied themselves for the U.S.
Federal Reserve's two-day policy meeting on Tuesday and
Wednesday.
 Oil prices fell early in the session from their highest
intraday level since September 2008. A sell-off in silver from
near record highs lifted the U.S. dollar off its lows,
prompting a bout of profit taking in crude. [O/R]
 Canada is a major exporter of oil and other commodities and
its currency is often influenced by moves in their prices. U.S.
crude prices rebounded from their lows to settle down just 1
cent at $112.28 a barrel.
 The Canadian dollar CAD=D4 ended the North American
session at C$0.9546 to the U.S. dollar, or $1.0476, down
slightly from Thursday's North American finish of C$0.9537 to
the U.S. dollar, or $1.0485. Most North American markets were
closed on Friday for the Easter holiday.
 Liquidity was lighter than usual, given the Easter Monday
holiday across much of Europe.
 Looking ahead, markets are focused on a news conference by
U.S. Federal Reserve Chairman Ben Bernanke on Wednesday, which
is the first regularly scheduled briefing by a Fed chief in the
central bank's 97-year history. [ID:nN20193559] [ID:nN1968758]
 His press conference, the first of what is scheduled to be
a four-times-a-year event, comes at the end of the Fed's
two-day policy meeting.
 "Because there's a press conference and because it's going
to be a very high profile format, people are sensitive to the
potential for something to be said," said Shaun Osborne, chief
currency strategist at TD Securities. He added Bernanke will
not likely make any new major policy announcements.
 Last week the Canadian dollar hit a 3-1/2 year high at
C$0.9455 to the U.S. dollar, or $1.0576.
 Data released Friday showed currency speculators are still
very bullish on the Canadian dollar against the greenback, with
the number of long positions nearly 28 times the number of
short positions on the International Monetary Market.
[ID:nN25194222]
 Osborne said that with little support from investors for
either the greenback or the euro, the Canadian dollar would
likely stay well bid for the time being.
 "The Canadian dollar to some degree benefits by a sort of
default trade, so everything suggests that the Canadian dollar
has the potential to outperform here."
 The U.S. dollar was seen likely to test an all-time low
this week if the U.S. Federal Reserve shows no sign of changing
its easy monetary policy. [ID:nN25205434]
 BONDS PRICES RISE
 Canadian bonds closely tracked U.S. Treasury prices higher
as market players got set to look to the Fed for signs it will
not rush to shrink its huge balance sheet, though buying was
kept to a minimum before a series of auctions.
 Bonds may also have benefited from weakness in North
American equities markets, said Doug Porter, deputy chief
economist at BMO Capital Markets.
 The next major Canadian economic data is due on Friday,
with the release of February's gross domestic product. ECONCA
 The two-year bond CA2YT=RR rose 5 Canadian cents to yield
1.779 percent, while the 10-year bond CA10YT=RR climbed 40
Canadian cents to yield 3.241 percent.
 (With additional reporting by Ka Yan Ng and Claire Sibonney;
Editing by Jeffrey Hodgson)