3 Min Read
(Fixes typo in 3rd paragraph)
* C$ at 0.9527 vs US$, or $1.050
* Bond prices track U.S. Treasuries down
* NDP surge to second place in polls
By Claire Sibonney
TORONTO, April 27 (Reuters) - The Canadian dollar lost some ground against a broadly weaker U.S. dollar on Wednesday, slightly weighed down by uncertainty over the May 2 election as support for the left-wing New Democrats surged and traders focused on potential surprises from the U.S. Federal Reserve.
The New Democrats, the small party once regarded as a bunch of left-wing do-gooders, have seen their popularity soar in recent days with polls released on Wednesday showing they have firmly knocked the trailing Liberals from second place. [ID:nN27113234]
"I've had more questions about the Canadian election in the last two days than I have had since it was announced," said Camilla Sutton, chief currency strategist at Scotia Capital.
Sutton said the chance of an NDP-led minority government is a likely negative for the Canadian dollar.
"A little less business friendly, a little less fiscal austerity that we would see under a Conservative majority so ... I suspect it's not something that brings dollar/Canada to C$1.05, it's something that weighs and has Canada underperform some of the crosses."
She said flat U.S. crude prices and narrowing interest rate spreads are not helping the Canadian dollar either.
The currency however is being supported by a broadly softer greenback, hurt by expectations the U.S. Federal Reserve will be reluctant to tighten monetary policy.
Later in the day, the U.S. central bank is widely expected to keep rates near zero and signal that it is in no hurry to scale back its massive support for the economy. [FRX/]
Investors are also anxious to parse Bernanke's comments in an unprecedented press conference after the Federal Open Market Committee concludes its meeting. [ID:nN1941922]
At 8:51 a.m. (1251 GMT), the currency CAD=D4 stood at C$0.9527 to the U.S. dollar, or $1.050, slightly down from Tuesday's North American finish at C$0.9518 to the U.S. dollar, or $1.0506.
Sutton said she expects the day's range for the currency to hold between C$0.9455 to C$0.9555, with further U.S. dollar weakening possibly lifting the Canadian dollar into positive territory.
Canadian bond prices slipped, tracking moves in U.S. Treasuries. [US/]
The two-year bond CA2YT=RR was down 7 Canadian cents to yield 1.776 percent, while the 10-year bond CA10YT=RR lost 38 Canadian cents to yield 3.235 percent.
(Reporting by Claire Sibonney)