CANADA FX DEBT-C$ steadies after five-day rally

Tue Dec 11, 2012 8:16am EST

* C$ little changed at C$0.9874 vs US$, or $1.0128
    * Bond prices ease across the curve

    By Claire Sibonney
    TORONTO, Dec 11 (Reuters) - Canada's currency steadied in a
narrow range after touching a more than seven-week high against
the U.S. dollar on Tuesday as investors consolidated gains
following a five-day advance.
    The Canadian dollar underperformed against other major
currencies against a broadly weaker greenback, including the
euro after better-than-expected German investor sentiment data.
 
    "As the euro has rallied, you've seen some weakness not only
in the U.S. dollar but in the Canadian dollar against the
crosses, so that, if anything, has kept the Canadian dollar
pretty static against the U.S. here," said Matt Perrier,
director of foreign exchange sales at BMO Capital Markets.
    The other main focus for investors was a meeting of the
Federal Reserve and "fiscal cliff" talks in the United States to
avoid $600 billion of previously drawn-up spending cuts and tax
hikes set to begin in the new year.
    When the Fed concludes its meeting on Wednesday, the central
bank is expected to extend its asset-purchase scheme and commit
to buy $45 billion of U.S. debt each month.
    At 8:01 a.m. (1301 GMT), the Canadian dollar stood
at C$0.9874 versus its U.S. counterpart, or $1.0128, compared
with Monday's session close at C$0.9870, or $1.0132. The
currency was stuck in a narrow range between C$0.9862-C$0.9880
but still edged up to its strongest level since Oct. 19.
    A close higher on Tuesday would mark the sixth straight
daily advance for the currency after the Canadian government's
approval of two big takeovers and a hawkish sounding central
bank boosted confidence over the past week.
    Market players will be looking at domestic trade data due at
8:30 a.m. for further direction.
    Perrier pointed to U.S. dollar support around C$0.9845,
followed by C$0.9815-20.
    He noted resistance in the C$0.9910-20 area. "You'd probably
see some of the more recent entrants into the short
dollar/Canada trade probably feel a little bit of pain on a move
through there," Perrier added.
    Canadian bond prices eased across the curve as global stock
markets advanced, buoyed by the pick-up in German confidence and
expectations the Federal Reserve will keep pumping money into
the U.S. economy. 
    Canada's two-year bond fell 3 Canadian cents to
yield 1.070 percent, and the benchmark 10-year bond 
lost 9 Canadian cents to yield 1.710 percent.
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