Reuters: US Dollar Report: CANADA FX DEBT-C$ perks up ahead of Fed policy decision

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CANADA FX DEBT-C$ perks up ahead of Fed policy decision Jan 29th 2013, 21:45 Tweet Share this Email Print Related Topics Currencies » Bonds News » Bonds » Markets » Tue Jan 29, 2013 4:45pm EST * C$ ends firmer at C$1.0024 vs US$, or 99.76 U.S. cents * Traders eye Fed policy meeting, U.S. Q4 GDP By Claire Sibonney TORONTO, Jan 29 (Reuters) - The Canadian dollar advanced modestly against its U.S. counterpart on Tuesday as the greenback came under pressure due to expectations that the U.S. Federal Reserve will maintain its ultra-easy monetary policy for the foreseeable future. The Fed ends a two-day policy meeting on Wednesday, and some analysts say the central bank could reinforce views that it will continue its quantitative easing program. Further easing is expected by many to hurt the U.S. dollar as the program increases the money supply. "We had profit-taking on the greenback ahead of the Fed announcement tomorrow so that helped the loonie rebound from six-month lows," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. Manimbo also noted that a rebound in Australian business confidence and a surprising trade surplus in New Zealand also helped boost commodity bloc currencies broadly. The Canadian dollar ended the North American session at C$1.0024 to the greenback, or 99.76 U.S. cents, compared with C$1.0065, or 99.35 U.S. cents, at Monday's close. The Canadian currency appears to have settled into a fresh range between C$1.01 and equal value with the U.S. dollar after weakening sharply last week on a dovish shift in the Bank of Canada's stance. Canada's central bank said it would hold rates steady for longer than it had expected, and tepid inflation data later in the week backed up that position. Investors will be seeking clues about the strength of the North American economy from U.S. fourth-quarter GDP figures on Wednesday and Canada's November GDP numbers on Thursday. Canadian bond prices eased across the curve as riskier assets such as commodities and equities advanced. Canada's two-year bond was down 2 Canadian cents to yield 1.162 percent, while the benchmark 10-year bond slipped 32 Canadian cents to yield 1.997 percent. Desjardins senior economist Jimmy Jean noted that for the first time since last spring, the yield on the Canadian benchmark 10-year bond is around the same level as its U.S. counterpart. "The spread has tended to close in phases of optimism and expand during periods of pessimism. Lingering uncertainties are likely to cause a slight outperformance of U.S. bonds and a re-widening of the spread in February," Jean said in a note to clients. Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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