CANADA FX DEBT-C$ slips to 2-month low as US$ gains on Fed speculation

Tue Nov 12, 2013 9:51am EST
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* Canada dollar at C$1.0493 vs US$, or 95.30 U.S. cents
    * Fall vs US dollar comes amid the greenback's broad gains
    * Expectations grow that Fed will trim stimulus soon

    By Alastair Sharp
    TORONTO, Nov 12 (Reuters) - The Canadian dollar weakened to
a two-month low against the U.S. currency in early trade on
Tuesday as speculation that the Federal Reserve is closer to
trimming its monetary stimulus lent support to the greenback.
    Robust jobs and economic growth data from south of the
border released last week has bolstered the view that the Fed
could soon cut back on its $85 billion-a-month in bond buying,
perhaps even as soon as at its December meeting.
    Adding to broad U.S. dollar strength against a basket of
currencies, the European Central Bank last week cut interest
rates in the euro zone to a record low.
    "We've had a big shift last week. We had the ECB show itself
to be aggressive and we had data in the U.S. much stronger than
expected, and we have globally an environment of disinflation,"
said Camilla Sutton, chief currency strategist at Scotiabank.
"All three of those things come together to support a stronger
U.S. dollar." 
    At 9:20 a.m. (1420 GMT) the Canadian dollar was
trading at C$1.0493 to the greenback, or 95.30 U.S. cents,
compared with C$1.0475, or 95.47 U.S. cents, at Monday's North
American close.
    The two-year bond was off 2 Canadian cents to
yield 1.139 percent, while the benchmark 10-year bond
 fell 22 Canadian cents to yield 2.637 percent.
    Scotia's Sutton said the biggest event on this week's
calendar is Thursday's Senate hearing of Fed Vice Chair Janet
Yellen, who has been nominated by President Barack Obama to
succeed Fed Chairman Ben Bernanke when his term expires in