CANADA FX DEBT-C$ ekes modest gain after Fed minutes, oil steady

Wed Jan 7, 2015 5:27pm EST
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(Adds details on poll, Fed, closing figures, comment)
    * Canadian dollar at C$1.1820 or 84.60 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Jan 7 (Reuters) - The Canadian dollar firmer
marginally against the greenback on Wednesday, helped in part by
a pause in the oil price rout and by minutes from the latest
Federal Reserve meeting, but the currency remained near
5-1/2-year lows.
    The loonie is expected to remain around these levels for
much of this year, according to a Reuters poll released on
Wednesday, weighed by the crash in crude prices and a U.S.
interest rate hike expected this year. 
    U.S. oil prices, which had fallen some 10 percent this week,
finished higher for the first time in five days after U.S. crude
inventories showed a surprising drop last week. It settled at
$48.65 a barrel. Canada is a major exporter of the commodity and
the Canadian dollar's retreat has largely shadowed that of oil
    The U.S. dollar also eased after market participants
digested minutes from the Fed's last policy meeting in December.
The U.S. central bank, which is widely expected to hike rates
sometime in the middle of 2015, advocated a patient stance on
monetary policy.
    "The FOMC was fairly dependent on the assumption that the
dollar rally, the oil price decline, that those were transitory
issues, and would not have a permanent impact on inflation,"
said Greg Anderson, global head of foreign exchange strategy in
New York with BMO Capital Markets, but he added that moves were
fairly subdued through the North American session.
    "Now that those things don't look nearly so transitory,
maybe the Fed would push things back a little bit. As a result,
you saw the dollar come off broadly, including against CAD." 
    The Canadian dollar finished the session at
C$1.1820 to the greenback, or 84.60 U.S. cents, slightly firmer
than Tuesday's finish of C$1.1828, or 84.55 U.S. cents.
    The Canadian dollar was weaker earlier in the session,
dampened by trade deficit data that was sharply higher than 
market expectations. 
    "I think the trade data in general has been receiving a
little bit more attention over the past several months just
given that it's become such a critical part of the narrative for
the Bank of Canada," said Mazen Issa, senior Canada macro
strategist at TD Securities.
    The Bank of Canada, which has repeatedly expressed concern
about the struggling export sector, is widely expected to keep
interest rates on hold until after the Fed makes its move.
    Canadian government bond prices were mixed across the
maturity curve, with longer-term securities falling. The
two-year bond was down 3 Canadian cents to yield 0.97
percent and the benchmark 10-year bond was off 17
Canadian cents to yield 1.656 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway and James