CANADA FX DEBT-C$ touches 2-mth low as Yellen offers little impetus

Thu Nov 14, 2013 4:48pm EST
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* C$ at C$1.0468 vs US$, or 95.53 U.S. cents
    * Lack of surprises in Yellen's remarks curbs C$ enthusiasm
    * Bond yields higher across the maturity curve

    By Leah Schnurr
    TORONTO, Nov 14 (Reuters) - The Canadian dollar touched a
two-month low on Thursday as early strength on optimism that the
U.S. Federal Reserve will remain accommodative for some time
wore off after comments from Janet Yellen lacked further impetus
for the currency to move higher.
    At a hearing on her nomination to head the Fed, Yellen
defended the U.S. central bank's steps to spur economic growth
and called efforts to boost hiring an "imperative".
    Yellen's prepared remarks had been released in advance on
Wednesday and had helped the loonie firm overnight as markets
tried to suss out a timetable for the Fed to start to wind down
its bond purchases.
    But analysts said expectations that Yellen will be dovish on
policy are already well priced into the market at this point and
the loonie lost steam during the North American session, hitting
its lowest level since early September.
    "The loonie doesn't really have much going for it in the
short to medium term. Everyone is looking for a reason to go
short the loonie and long the U.S. dollar," said Rahim Madhavji,
president of Knightsbridge in Toronto. 
    The Canadian dollar ended the North American
session at C$1.0468 to the greenback, or 95.53 U.S. cents,
weaker than Wednesday's close of C$1.0462, or 95.58 U.S. cents. 
    While the Canadian dollar could weaken further to the C$1.06
range, it should recover to C$1.03 by the middle of next year,
Madhavji said.
    The loonie showed only muted reaction to figures that showed
Canada's trade deficit in September dropped by more than half as
exports grew at a much faster rate than imports. 
    Canadian bond yields were higher across the maturity curve,
with the two-year bond up half a Canadian cent to
yield 1.106 percent, while the benchmark 10-year bond
 rose 17 Canadian cents to yield 2.558 percent.