CANADA FX DEBT-C$ firms after recent drop, but outlook remain weak
* Canadian dollar at C$1.0694 or 93.51 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Dec 30 (Reuters) - The Canadian dollar firmed modestly against the greenback on Monday, bouncing back from the previous session's drop, though an absence of economic data is likely to keep investors focused on the longer-term bearish outlook for the currency. Trading was expected to be muted heading into the New Year's Day holiday later in the week. Lighter liquidity can exaggerate moves. There is no Canadian economic data on tap until the new year, but investors will get a look at U.S. pending home sales for November later in the morning. Still, the lack of significant releases is likely to leave the Canadian currency searching for direction. "I would say the market is operating at maybe 50 percent liquidity at the moment, at best," said Darcy Browne, managing director of foreign exchange sales at CIBC World Markets in Toronto. "Based on the order books, it still seems that people are willing to buy the dollar dips ... we still think that C$1.08, C$1.0850 is very achievable in the near-term," said Browne. The Canadian dollar was at C$1.0694 to the greenback, or 93.51 U.S. cents, stronger than Friday's close of C$1.0704, or 93.42 U.S. cents. The Canadian dollar traded as low as C$1.0728 overnight. Analysts see the C$1.07 level as potentially providing support for the currency. After losing more than 7 percent this year, many analysts expect the loonie to continue to weaken in 2014. A more neutral stance from the Bank of Canada and the ongoing reduction of the Federal Reserve's economic stimulus program is seen keeping pressure on the Canadian dollar. Canadian government bond prices were higher across the maturity curve, with the two-year up 1.8 Canadian cents to yield 1.144 percent and the benchmark 10-year up 14 Canadian cents to yield 2.770 percent.
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