CANADA FX DEBT-C$ flat as investors watch U.S. budget battle
* C$ at C$1.0313 versus US$ or 96.96 U.S. cents * U.S. government faces shutdown amid budget impasse * Bond prices lower By Solarina Ho TORONTO, Sept 26 (Reuters) - The Canadian dollar held steady against its U.S. counterpart on Thursday with investors focused on upcoming economic data and the budget impasse in Congress that threatens a U.S. government shutdown next week and a debt default. "Most currency markets are feeling very quiet as players reposition themselves and begin to shift into data-watching mode," said Camilla Sutton, chief currency strategist at Scotiabank, noting that the most important upcoming data will be U.S. employment figures a week from this Friday. "Globally, politics play an important role and when we have political gridlock in the U.S., there's a significant risk there going forward." The U.S. Congress, struggling to avert a government shutdown next week, was warned by the Obama administration on Wednesday that the Treasury was quickly running out of funds to pay government bills and could soon face a damaging debt default. The greenback struggled to make gains against a basket of currencies on Thursday. But the market also refrained from aggressively selling the U.S. dollar, which has rallied when past impasses were resolved as, on balance, this one is expected to be. The Canadian dollar was trading at C$1.0313, or 96.96 U.S. cents, at 9:39 a.m. (1339 GMT), exactly where it stood at Wednesday's North American close. Sutton said she expected he Canadian dollar, whose performance was mixed against other major currencies, to trade between C$1.0275 and C$1.0345 on Thursday. Prices for Canadian government bonds were lower. The two-year bond was off one Canadian cent to yield 1.217 percent. The benchmark 10-year bond slipped 12 Canadian cents to yield 2.590 percent.
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