TORONTO (Reuters) - The Canadian dollar was weaker against the U.S. dollar on Tuesday following a holiday in Canada and as its counterpart rallied ahead of testimony by U.S. Federal Reserve Chairman Ben Bernanke on Wednesday.
It was little changed from Friday’s close, when Canadian equity and bond markets were last open.
Bernanke will be testifying before Congress on Wednesday and market watchers will be parsing his comments for hints on the Fed’s bond-buying plans. Speculation the U.S. central bank will trim bond purchases sooner than expected has mounted given signs of improvement in the U.S. labor market and recent comments by some Fed officials. <FRX/>
“It seems like they’ve got a bit of a sustained PR campaign going on it, and the market is reacting accordingly,” said John Curran, senior vice president at CanadianForex.
Curran noted that Bernanke himself has not made any comments so far, however. The U.S. dollar may weaken off if Bernanke reiterates his ultra-loose monetary policy stance, but it is likely to strengthen further if he provides some hint that asset purchases could be wound down later this year.
At 9:25 a.m. (1325 GMT), the Canadian dollar was trading at C$1.0293 versus the U.S. dollar, or 97.15 U.S. cents, weaker than Monday’s finish at C$1.0241, or 97.65 U.S. cents.
Canadian equity and bond markets were closed on Monday due to the Victoria Day holiday, leaving most trading desks at Canadian banks unstaffed.
It held steady from Friday’s North American finish at C$1.0291, or 97.17 U.S. cents, after shedding some 1.8 percent against the greenback last week.
The currency, which was mostly underperforming its key counterparts, was likely to trade between C$1.0250 and C$1.0325 on Tuesday, according to Curran.
The price of Canadian government debt were mixed, with gains on the shorter end. The 2-year bond was flat, with a yield of 1.010 percent, while the benchmark 10-year bond slipped 9 Canadian cents to yield 1.937 percent.
Reporting by Solarina Ho