CANADA FX DEBT-C$ flat ahead of Fed interest rate decision
* Canadian dollar at C$1.3257, or 75.43 U.S. cents * Bond prices higher across the maturity curve (Updates prices, adds quote) TORONTO/OTTAWA, Sept 14 (Reuters) - The Canadian dollar was little changed against the greenback on Monday, trading within a narrow range with the U.S. Federal Reserve due to make a highly anticipated interest rate decision later this week. The Fed had been indicating it planned to hike rates at some point this year, but recent worries about global growth and lackluster Chinese economic data have increasingly raised the possibility that it may delay a rate hike until 2016. A Reuters poll last week showed a small majority of forecasters still expect the U.S. central bank to announce a rate hike at the end of its two-day policy meeting on Thursday, though markets-based models suggest the monetary policy tightening will be delayed. It would be the first rate increase in nearly a decade. After losing about 14 percent this year so far, the Canadian dollar has been consolidating in recent weeks and movement was subdued on Monday. "It does seem like everybody is just sitting on their hands, said Amo Sahota, director at Klarity FX in San Francisco. But it would be a mistake for traders to simply wait for the Fed, with some potentially market moving events coming before then, including a rate decision from the Bank of Japan, and minutes and testimony from the Reserve Bank of Australia, Sahota said. The Canadian dollar ended the North American session at C$1.3257 to the greenback, or 75.43 U.S. cents, little changed from the Bank of Canada's official close of C$1.3254, or 75.45 U.S. cents. While it is difficult to predict which way the loonie will trade in the aftermath of the Fed decision, a move to raise rates could support the Canadian dollar in the medium term as it would suggest a continuing U.S. recovery that should bolster Canada's economy, Sahota said. "If they give some really solid guidance that we think the destabilization in China with the devaluation and slower growth that they're seeing is not really impactful for the U.S., that's good news for Canada," he said. Canadian government bond prices were higher across the maturity curve, with the two-year price up half a Canadian cent to yield 0.456 percent and the benchmark 10-year up 6 Canadian cents to yield 1.467 percent. The Canada-U.S. two-year bond spread was -27.4 basis points, while the 10-year spread was -72.2 basis points. (Reporting by Solarina Ho in Toronto and Leah Schnurr in Ottawa; Editing by Cynthia Osterman)
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