January 16, 2018 / 2:47 PM / in 3 months

CANADA FX DEBT-C$ firms vs stronger greenback; BoC rate decision due Wednesday

    * Canadian dollar at C$1.2414, or 80.55 U.S. cents.
    * Bond prices mixed across the yield curve

    TORONTO, Jan 16 (Reuters) - The Canadian dollar edged higher
against its broadly firmer U.S. counterpart on Tuesday as
investors braced for a potential interest rate hike from the
Bank of Canada on Wednesday.
    At 9:24 a.m. EST (1424 GMT), the Canadian dollar         
was trading 0.1 percent higher at C$1.2414 to the greenback, or
80.55 U.S. cents.
    The currency traded in a range of C$1.2414 to C$1.2452. It
touched its strongest on Monday in nearly one week at C$1.2403.
    The Bank of Canada raised interest rates in July for the
first time in seven years and then again in September. Its
benchmark rate sits at 1 percent.
    Chances of another rate hike on Wednesday are around 90
percent, the overnight index swaps market indicates.           
    "Several conditions have been met for the BoC to continue
withdrawing monetary stimulus," a BofA Merrill Lynch Global
Research report said, including strong growth in the domestic
economy, low unemployment, rising underlying inflation and
Federal Reserve rate hikes.
    "NAFTA uncertainty should not have an impact on monetary
policy unless the risk of a breakdown materializes," the report
said.
    The sixth round of the renegotiation of the North American
Free Trade Agreement is due to place in Montreal from Jan. 23 to
28.       
    The U.S. dollar        climbed against some major currencies
including the euro, as sources said the European Central Bank
was unlikely at next week's meeting to ditch a pledge to keep
buying bonds.             
    The price of oil, one of Canada's major exports, pulled back
from a three-year high reached earlier in the session. U.S.
crude        prices were down 0.3 percent at $64.12 a barrel.
            
    Canadian government bond prices were mixed across the yield
curve, with the two-year            flat to yield 1.776 percent
and the 10-year             rising 6 Canadian cents to yield
2.182 percent.

 (Reporting by Fergal Smith; Editing by Phil Berlowitz)
  
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