CANADA FX DEBT-C$ firms on Cyprus hopes; Fed in focus
* C$ at C$1.0254 vs US$, or 97.52 U.S. cents * C$ firms vs yen, NZD, AUD; weaker vs European currencies * Fed expected to maintain bond buying policy * Bond prices fall across curve By Solarina Ho TORONTO, March 20 (Reuters) - The Canadian dollar firmed against its U.S. counterpart on Wednesday as investors were hopeful a Cyprus deal could be reached to rescue the indebted euro zone country. The Cypriot parliament rejected on Tuesday a proposed levy on bank deposits, which was a condition for the bailout. The general assumption in markets is that policymakers will cobble together a deal to keep Cyprus in the currency bloc. "I think the market's taking a wait and see ... the hopes are that they come to some solution that won't be quite as radical," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets. At 9:23 a.m. (1323 GMT), the Canadian dollar was trading at C$1.0254 versus the greenback, or 97.52 U.S. cents, stronger than Tuesday's North American session finish at C$1.0270, or 97.37 U.S. cents. Its performance was mixed against other key foreign currencies. It was stronger against the Japanese yen and its commodities-linked cousins, the New Zealand and Australian dollars. It was underperforming against its European counterparts including the euro and sterling. Mikolich said the currency was likely to trade between C$1.0210 and C$1.03 on Wednesday. The loonie, as the currency is colloquially known, remains under pressure as domestic data remains mixed and more evidence is needed to support last month's robust employment figures. The Canadian dollar traded within a narrow 37 point range on Wednesday, between C$1.0239 and C$1.0276. Mikolich said comments from the Federal Reserve this afternoon will be the next likely currency driver. The U.S. central bank is wrapping up a two-day meeting on Wednesday and will release its policy statement along with a new set of economic projections at 2 p.m. It is expected to maintain its policy of buying $85 billion a month in mortgage and Treasury bonds although there is expected to be a debate about the potential risks of stimulus. Prices for Canadian government debt slipped across the curve, with the two-year bond down 3.8 Canadian cents to yield 0.989 percent, while the benchmark 10-year bond eased 29 Canadian cents to yield 1.854 percent.
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