CANADA FX DEBT-C$ steadies at the end of dismal 2014

Tue Dec 30, 2014 9:50am EST
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* Canadian dollar at C$1.1625 or 86.02 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    OTTAWA, Dec 30 (Reuters) - The Canadian dollar firmed
slightly against the greenback on Tuesday and was expected to
hew to a tight trading range in subdued holiday volume as the
loonie was set to close out its worst year since 2008.
    Jitters over the future of Greece's bailout program as the
country heads to an early election next month sapped investors'
appetite for risk, sending the U.S. dollar lower to the
benefit of the loonie. 
    "Overall, the loonie is following the broader trend in the
U.S. dollar," said Martin Schwerdtfeger, FX strategist at TD
Securities in Toronto.
    "Even if the broader view is that the U.S. dollar-Canadian
dollar should be going higher, at this point nobody is willing
to extend U.S. dollar longs."
    The Canadian dollar was at C$1.1625 to the
greenback, or 86.02 U.S. cents, slightly stronger than Monday's
close of C$1.1629, or 85.99 U.S. cents.
    The morning's gains were even smaller relative to the 8.5
percent drop the Canadian dollar has seen this year. With only
two trading days left in 2014, the loonie was on track to see
its worst year in six years.
    Analysts expect the Canadian dollar will continue to lose
ground in 2015, with monetary policy in Canada and the United
States likely to converge. The weak price of oil, which is a
major export for Canada, is also seen weighing on the currency.
    Schwerdtfeger expects to see the loonie hit C$1.18 or C$1.19
to the U.S. dollar by the middle of next year.
    "On-going weakness for crude oil will mean even further
downward pressure for the Canadian dollar and that is still not
fully reflected in the price," he said.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3-1/2 Canadian
cents to yield 1.016 percent and the benchmark 10-year
 up 18 Canadian cents to yield 1.812 percent.

 (Editing by W Simon)