CANADA FX DEBT-C$ firms ahead of Nexen deal closing; G20 in focus

Wed Feb 13, 2013 5:09pm EST

* C$ at $1.0018 vs US$, or 99.82 U.S. cents
    * Nexen deal closes Feb 25, could boost the C$
    * Currency talk at the G20 meeting in Moscow this weekend in
focus

    By Solarina Ho
    TORONTO, Feb 13 (Reuters) - The Canadian dollar was
marginally firmer against the U.S. dollar on Wednesday, but with
little domestic news on the agenda it was expected to be mostly
sidelined until the $15.1 billion takeover of Canadian oil
producer Nexen Inc by China's CNOOC Ltd 
closes later this month.
    "It's generally been a quiet trading session today. There's
not a lot of headline flow today," said Mazen Issa, a macro
strategist at TD Securities.
    The Canadian dollar got a slight boost on Tuesday after U.S.
regulators approved the CNOOC takeover, the final hurdle the
deal faced. It is expected to close the week of Feb. 25 and
could generate buying of Canadian dollars to pay Canadian
investors for their shares. 
    "People took [the Nexen approval] to mean that there should
be some Canada-positive flow. Although it's very unclear as to
what that flow's going to be," said John Curran, senior vice
president at CanadianForex.
    If the Nexen deal does support the currency, Curran said it
could be an excellent opportunity to sell the Canadian dollar in
the medium term, given Canada's recent sluggish economic data
and the Bank of Canada's more dovish stance.
    The currency closed the North American session at
C$1.0018 versus the U.S. dollar, or 99.82 U.S. cents, slightly
firmer than Tuesday's finish of C$1.0027, or 99.73 U.S. cents.
    "I think we are going to be sort of sidelined and remain
within this range until the 25th," Curran said.
     The Canadian dollar strengthened against the euro 
and the yen on Wednesday and reached its strongest
level against sterling in more than five months.
    "The Canadian dollar isn't the major story out there when
you look at all the other currencies and what they are doing. So
we may be dragged around a little bit by the nose due to
cross-flows, which will all filter through to us," Curran said.
    The yen was flat against the U.S. dollar on Wednesday, after
rising sharply the day before, with investors growing cautious
ahead of a key meeting of Group of 20 finance ministers and
central bankers this weekend in Moscow. Exchange rates and the
yen will likely be in the spotlight..
    Policymakers and investors worry that the new Japanese
government's push on its central bank for a looser monetary
policy, which has weakened the yen, could trigger currency wars.
    Issa, however, said the G20 historically does not generate
currency-moving news. He expects Canada's dollar to trade
between parity with the U.S. dollar and C$1.0050 in the near
term.
    Canadian government bonds fell across the curve, with the
price of the two-year bond down 5 Canadian cents,
yielding 1.148 percent, and the benchmark 10-year bond
 down 35 Canadian cents, with a yield of 2.037
percent.
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