CANADA FX DEBT-C$ ekes out gain after Fed, U.S. GDP

Wed Jan 30, 2013 4:42pm EST

* C$ ends at C$1.0015 vs US$, or 99.85 U.S. cents

* C$ touches more than 13-month low vs euro

* Bond prices little changed across the curve

* U.S. Q4 GDP misses expectations

* Fed keeps stimulus in place

By Claire Sibonney

TORONTO, Jan 30 (Reuters) - The Canadian dollar crept up to a near one-week high against its U.S. counterpart on Wednesday after the U.S. Federal Reserve's pledge to stick to its ultra-accommodative policy stance offset data that showed a surprise contraction in U.S. fourth-quarter growth.

At the end of a two-day policy meeting, the Fed left in place its monthly $85 billion bond-buying stimulus plan, saying economic growth had stalled but indicating the pullback was likely temporary.

"Today started off with GDP being off what was expected for Q4, and then ... nothing different out of the last two days in (Fed) meetings, so I think people are more just sitting on the sidelines right now, seeing more from a technical standpoint if we're going to hold certain levels," said Michael Ward, USForex's CEO of North America and Europe, based in San Francisco.

The Canadian currency has recently settled into a 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.

The Canadian dollar ended the North American session at C$1.0015 versus the U.S. dollar, or 99.85 U.S. cents, a bit firmer than Tuesday's close at C$1.0024, or 99.76 U.S. cents. It hit an intraday high of C$1.0009, or 99.91 U.S. cents, its strongest level since Jan. 24.

On other currency crosses, the Canadian dollar hit a more than 13-month low against the euro as traders contrasted fresh evidence of a soft a North American outlook with the improving economic view of the euro zone.

Describing the U.S. job market as continuing its modest pace of improvement, the Fed repeated a vow to keep purchasing securities until the outlook for employment "improves substantially."

U.S. gross domestic product fell at a 0.1 percent annual rate in the fourth quarter after growing at a 3.1 percent clip in the previous three months, though analysts said there was no reason for panic given that consumer spending and business investment picked up.

"The net effect (of the U.S. GDP data) has been remarkably limited actually on currencies generally," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.

On Thursday, traders will be paying close attention to Canadian November GDP figures to provide further evidence of a lackluster performance for the end of last year.

Canadian bond prices were little changed across the curve. The two-year bond was off 1 Canadian cent to yield 1.171 percent, while the benchmark 10-year bond was flat to yield 1.998 percent.

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