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7 months ago
CANADA FX DEBT-C$ ends flat as market awaits direction from Fed
December 13, 2016 / 9:58 PM / 7 months ago

CANADA FX DEBT-C$ ends flat as market awaits direction from Fed

3 Min Read

(Adds broker comment, updates prices to close)
    * Canadian dollar settles at C$1.3133, or 76.14 U.S. cents
    * Loonie strongest since Oct. 19 at C$1.3102
    * Bond prices lower across yield curve

    By Alastair Sharp
    TORONTO, Dec 13 (Reuters) - The Canadian dollar ended flat
against a steady U.S. counterpart on Tuesday after touching a
near eight-week high, as investors braced for the U.S. Federal
Reserve to hike interest rates on Wednesday and provide
direction on its future monetary policy.
    The loonie, as Canada's currency is known, has gained
steadily in recent weeks on the back of higher prices for oil, a
major Canadian export. The greenback has also gained against a
basket of currencies in that time.
    Fed fund futures show a 97 percent probability that the U.S.
central bank would lift rates by a quarter of a percentage point
at the end of its two-day policy meeting on Wednesday, according
to the CME Group. 
    "It's already about the next move, when does it happen, and
why does the Fed take us there," said Brad Schruder, director of
corporate sales and structuring at BMO Capital Markets.
    "If the Fed happens to deliver even a bit of minor dovish
rhetoric, I think you're going to see a really quick move in
many markets where people look to take profit," he said.
    But Schruder said the loonie might not gain from flows out
of the U.S. currency, which he said would likely be used to buy
the Japanese yen and the euro instead.
    "I think that dollar/Canada has the potential to turn a
couple of pennies higher from here" in the immediate aftermath
of the Fed news, he said.
    Oil prices edged off earlier gains to end Tuesday nearly
unchanged, as the support from a plan by the Organization of the
Petroleum Exporting Countries to limit production were undercut
by an energy watchdog's assessment of how much those nations are
currently producing. 
    The Canadian dollar settled at C$1.3133 to the
greenback, or 76.14 U.S. cents, one pip stronger than Monday's
close of C$1.3134, or 76.14 U.S. cents.
    The currency traded in a tight range of C$1.3139 to
C$1.3102, its strongest level since Oct. 19.
    Canadian government bond prices slipped across the yield
curve, with the two-year down 3 Canadian cents to
yield 0.777 percent and the benchmark 10-year 
slipping back 8 Canadian cents to yield 1.756 percent.
    It had earlier touched its highest intraday level since July
2015 at 1.781 percent.

 (Additional reporting by Fergal Smith; Editing by Nick
Zieminski and Richard Chang)

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