CANADA FX DEBT-C$ strengthens against broadly weaker greenback as Fed in focus
* Canadian dollar at C$1.2995, or 76.95 U.S. cents * Bond prices higher across the maturity curve TORONTO, July 27 (Reuters) - The Canadian dollar firmed against its U.S. counterpart on Monday as the greenback softened broadly and markets awaited the outcome from the U.S. Federal Reserve's policy meeting this week. The U.S. dollar's retreat, which followed Friday's sharp drop in U.S. stocks and treasury yields, helped offset the impact of cheaper oil, a major Canadian export. Crude prices fell to four-month lows, after Chinese stocks plunged more than 8 percent in their biggest one-day drop in eight years. Markets were awaiting the Fed's latest interest rate decision, with many expecting the central bank to lay the groundwork for an increase later this year, possibly as early as September. A hike would stand in marked contrast to the Bank of Canada's 25 basis point rate cut earlier this month, the second one this year. * At 9:24 a.m. EDT (1324 GMT), the Canadian dollar was trading at C$1.2995 to the greenback, or 76.95 U.S. cents, stronger than the Bank of Canada's official close of C$1.3035, or 76.72 U.S. cents, on Friday. * The loonie, which had plunged to its weakest level since 2004 last week, was trading between C$1.2980 and C$1.305 on Monday. * There is little major economic data in Canada on tap this week until Friday's gross domestic product figures for May. * China's stock rout, which sent commodity prices lower, followed weaker-than-expected Chinese economic data last week and indicated an unprecedented government rescue effort to prop up valuations had run out of steam. * U.S. crude prices were down 1.35 percent to $47.49, while Brent crude lost 1.90 percent to $53.58. * The Canadian dollar is expected to trade between C$1.3010 and C$1.3100 against the U.S. dollar during Monday's North American session, according to National Bank Financial. * Canadian government bond prices were higher across the maturity curve, with the two-year price up 3 Canadian cents to yield 0.417 percent and the benchmark 10-year rising 38 Canadian cents to yield 1.447 percent. * Canada-U.S. spreads narrowed, with the two-year bond at -24.1 basis points and the 10-year at -77.1 basis points. (Reporting by Solarina Ho; Editing by Lisa Von Ahn)
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