* Canadian dollar at C$1.0590 or 94.43 U.S. cents
* Bond prices mixed across the maturity curve
By Leah Schnurr
TORONTO, Dec 16 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday amid investor caution
ahead of a Federal Reserve policy meeting later this week at
which some market participants expect the Fed may announce it
will begin to wind down its stimulus.
The Fed will release a statement at the end of its two-day
meeting from Dec. 17-18. The U.S. central bank is currently
buying $85 billion a month in bonds, which has been a major
driver of global markets this year.
A recent Reuters poll of primary dealers showed the Fed is
expected to begin reducing its bond-buying program no later than
March, though a few firms thought the Fed could announce a
cutback as soon as this month.
"Our base case is that they lay the foundation for tapering
in January," said Camilla Sutton, chief currency strategist at
Scotiabank in Toronto.
"The one big piece that's likely to hold them back from
tapering is the disinflationary environment that the U.S.
economy is in."
Even so, with the recent budget deal in Washington and
better-than-expected jobs data, the market seems to be
increasingly turning toward the potential for the Fed to start
winding down this week, said Sutton.
The Canadian dollar was at C$1.0590 to the
greenback, or 94.43 U.S. cents, modestly firmer than Monday's
close of C$1.0595, or 94.38 U.S. cents.
A faster timetable for the Fed is seen as a negative for the
Canadian dollar as it is expected to reduce risk appetite and
benefit the U.S. currency.
In addition to uncertainty over the Fed's plans, the loonie
has been hit by a less hawkish Bank of Canada and softer oil
prices in recent weeks, all of which sent the currency to a
3-1/2-year low at the beginning of the month.
At home, data showed foreign investment in Canadian
securities was roughly halved in October, with money market
holdings slumping. The loonie saw little reaction to the
report.
Canadian government bond prices were mixed across the
maturity curve, with the two-year up 0.4 Canadian
cent to yield 1.105 percent and the benchmark 10-year
down 6 Canadian cents to yield 2.672 percent.