CANADA FX DEBT-C$ firms with Fed meeting in spotlight

Tue Jul 28, 2015 9:25am EDT
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* Canadian dollar at C$1.3003 or 76.91 U.S. cents
    * Bond prices mostly lower across the maturity curve

    TORONTO, July 28 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Tuesday as investors positioned
themselves ahead of Wednesday's Federal Reserve interest rate
    The price of oil, a major Canadian export, remained under
pressure amid a sell-off in Chinese stocks and concerns about
oversupply, but was a touch higher after sliding earlier in the
    The U.S. central bank kicks off a two-day meeting on Tuesday
and will issue its policy statement on Wednesday. Some expect
the Fed to give a clearer signal as to when it will hike
interest rates, with many economists forecasting September. 
    Slowing growth in China, the world's second largest economy,
and soft commodity prices have spurred speculation that the Fed
could delay a rate hike - the first since 2006 - until next
    A U.S. rate hike this year would be in divergence to the
Bank of Canada, which has already cut rates by 25 basis points 
twice this year, and is expected to eventually drive the
Canadian dollar toward even weaker levels.
    * At 8:55 a.m. EDT (1255 GMT), the Canadian dollar 
was trading at C$1.3003 to the U.S. dollar, or 76.91 U.S. cents,
stronger than the Bank of Canada's official close of C$1.3045,
or 76.66 U.S. cents on Monday.
    * The loonie, while off 2004 lows, was still trading between
C$1.2996 and C$1.3043 on Tuesday.
    * In Canada, data showed producer prices rose 0.5 percent in
June from May due to higher prices for energy and petroleum
products, as well as motorized and recreational vehicles.
    * U.S. crude prices were up 0.08 percent to $47.43 a
barrel, after going as low as $46.68, while Brent crude 
lost 0.94 percent to $52.97, after sliding to as low as
    * The Canadian dollar, which was stronger than many of its
currency counterparts, is expected to trade between C$1.2970 and
C$1.3050 against the U.S. dollar on Tuesday, according to RBC
Capital Markets.
    * Canadian government bond prices were mostly lower across
the maturity curve, with the two-year down 3 Canadian
cents to yield 0.435 percent and the benchmark 10-year
 falling 41 Canadian cents to yield 1.5 percent.
    The Canada-U.S. two-year bond spread widened to -23.9 basis
points, while the 10-year spread narrowed to -76.6 basis points.

 (Reporting by Solarina Ho; Editing by Paul Simao)