CANADA FX DEBT-C$ little changed as markets await U.S. Fed

Mon Mar 16, 2015 4:37pm EDT
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(Adds fresh comment, closing figures, additional details)
    * Canadian dollar at C$1.2780 or 78.25 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    OTTAWA, March 16 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday as investors were wary
of taking aggressive bets ahead of a U.S. Federal Reserve
decision and major domestic economic data later in the week.
    Despite U.S. crude prices that hit a six-year low on Monday
on heightening concerns that the United States may run out of
oil storage, the loonie managed to hold its ground, gaining
support from profit-taking in the U.S. dollar. U.S. oil futures
settled at $43.88 a barrel. 
    "Oil has had a pretty impressive decline and we really have
not had an equal amount of Canadian dollar weakness today," said
 Amo Sahota, director at Klarity FX in San Francisco.
    "The big event this week is the U.S. federal Reserve and the
market is just paring back some of the U.S. dollar gains it's
been enjoying and trying to shift a little bit to the sidelines
ahead of that meeting. That's really the saving grace for a lot
of currencies today."
    The Canadian dollar ended the session at C$1.2780
to the U.S. dollar, or 78.25 U.S. cents, just moderately
stronger than Friday's close of C$1.2790, or 78.19 U.S. cents.
    The Fed dominates a busy week for central banks around the
world. Investors are focused on whether the Federal Reserve, in
its policy announcement on Wednesday, will drop its pledge to be
"patient" in considering interest rate increases.
    "If the Fed does remove the 'patient' language at
Wednesday's meeting, it'll increase the probability that the
first rate hike is June," said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    "Essentially, we'll see further upward pressure on U.S.
dollar-Canadian dollar, and I don't think the C$1.28 handle will
be able to hold for too long."
    Klarity FX's Sahota added that the continuing decline in
crude prices will also make it very difficult for USD/CAD to
remain below that level.
    Markets will also be digesting a full economic calendar at
home, culminating in February inflation and January retail sales
reports on Friday.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2.5 Canadian
cents to yield 0.539 percent. The benchmark 10-year 
was up 38 Canadian cents to yield 1.436 percent.

 (Additional reporting by Solarina Ho; Editing by Lisa Von Ahn)