CANADA FX DEBT-C$ sidelined ahead of Fed decision

Tue Mar 17, 2015 4:52pm EDT
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(Adds details, fresh comment, closing figures)
    * Canadian dollar at C$1.2776 or 78.27 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, March 17 (Reuters) - The Canadian dollar traded
near flat against the greenback on Tuesday despite another fall
in U.S. crude prices and weak domestic data, as investors looked
ahead to the Federal Reserve's latest monetary policy decision
and guidance.
    U.S. crude settled at $43.46 a barrel, as the market braced
for a 10th straight week of record oil inventories. Canada is a
major oil exporter and the economy has been feeling the impact
of a dramatic plunge in prices. 
    Data earlier on Tuesday showed Canadian manufacturing sales
fell more than anticipated in January, hit by a drop in
petroleum and coal product sales. The industry has seen sales
fall 35 percent in the last seven months alongside the fall in
crude prices. 
    "It's interesting that the Canadian dollar didn't react more
given oil hit another marginal new low and manufacturing was, at
least in my mind, clearly softer than expected," said Greg
Moore, senior currency strategist at RBC Capital Markets.
    "That does show pretty clearly that markets might be thinner
first of all because of the March break holidays, and that the
focus is really on the Fed tomorrow. It's typical to see
consolidation ahead of a big event."
    The Canadian dollar ended the session at C$1.2776
to the greenback, or 78.27 U.S. cents, little changed from
Monday's finish at C$1.2780, or 78.25 U.S. cents.
    The U.S. dollar fell broadly on concerns that the currency's
recent surge could prompt the Federal Reserve to take a more
cautious stance on interest rate hikes this year. 
    The Fed on Tuesday began a two-day meeting where
policymakers will consider whether the time is right for the
U.S. central bank to strike a promise to be "patient" from its
statement in deciding when to raise interest rates. The Fed will
release its statement at 1400 EDT (1800 GMT) on Wednesday.
    The market has been widely expecting the U.S. central bank
to hike rates this summer or fall, which would mark a clear
divergence from many other central banks around the world.
    Jeremy Stretch, head of foreign exchange strategy at CIBC
World Markets in London, said many are anticipating the Fed will
remove the word "patient" from its forward guidance, but added
that recent U.S. data has made that "less of a slam dunk" than
    Looking ahead, Canadian retail sales for January and
inflation data for February due on Friday will be the next key
economic data that could provide further direction for the
    Canadian government bond prices were mixed across the
maturity curve, with the two-year off 1.5 Canadian
cents to yield 0.541 percent and the benchmark 10-year
 rising 16 Canadian cents to yield 1.414 percent.

 (Editing by Jonathan Oatis and G Crosse)