CANADA FX DEBT-Canada dollar firms as Fed remains in focus

Wed Nov 13, 2013 4:49pm EST
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* C$ at C$1.0462 vs US$, or 95.58 U.S. cents
    * Bond yields higher across the maturity curve

    By Leah Schnurr
    TORONTO, Nov 13 (Reuters) - The Canadian dollar strengthened
against the greenback on Wednesday, rebounding from a two-month
low as investors continued to try to gauge the future path of
monetary policy for the U.S. Federal Reserve.
    The loonie has weakened by two cents in recent weeks after
the Bank of Canada dropped its mild rate-hike bias and decent
economic data out of the United States raised expectations the
Fed will move to tighten its monetary policy.
    But on Tuesday, two senior Fed officials said the central
bank should keep monetary policy ultra-easy, reinforcing views
the Fed will not reduce the pace of its bond buying before next
    That pushed the U.S. currency down 0.3 percent against a
basket of currencies on Wednesday, giving strength to the
    Still, the currency pairing is likely to head back to the
mid-C$1.05 to C$1.06 levels in the weeks ahead, said Gareth
Sylvester, director at Klarity FX in San Francisco.
    "In the next day or two, we're looking at a very neutral
dollar-Canadian dollar market. From a weekly perspective, we're
certainly bullish," said Sylvester.
    The Canadian dollar ended the North American
session at C$1.0462 to the greenback, or 95.58 U.S. cents,
stronger than Tuesday's close of C$1.0493, or 95.30 U.S. cents.
The loonie had touched its lowest level since early September on
    Investors were also looking ahead to Thursday's Senate
confirmation hearing at which Fed Chair nominee Janet Yellen is
expected to speak.
    In remarks made available in advance of the hearing, Yellen
said the Fed has "more work to do" to help an economy and labor
market that are still underperforming. 
    Domestically, Canadian trade balance data is on tap for
Thursday, with the trade deficit expected to narrow slightly to
C$1 billion in September from C$1.31 billion in August.
    The two-year bond was up 4 Canadian cents to
yield 1.119 percent, while the benchmark 10-year bond
 rose 41 Canadian cents to yield 2.595 percent.