CANADA FX DEBT-C$ weakens slightly after Fed holds steady
* C$ at C$1.0081 vs US$, or 99.20 U.S. cents * Fed, as expected, points to later tapering of QE3 * Bonds higher across the curve By Alastair Sharp TORONTO, May 1 (Reuters) - The Canadian dollar ended slightly weaker against its U.S. counterpart on Wednesday after five straight days of gains as the Federal Reserve maintained its plan to buy bonds in order to keep borrowing costs low to prop up the U.S. economy. Expectations that the Fed would make a dovish policy statement had helped push the loonie, as Canada's currency is colloquially known, higher in the run-up to the announcement. "Dollar/Canada has come a long way in the past few days," said Greg Moore, foreign exchange strategist at TD Securities, "Expectations were pretty much spot on, so that may be why we're not seeing too much reaction in the aftermath." The Fed expressed concern about an economic drag from Washington's belt-tightening, and reinforced its intention to keep buying assets until unemployment falls significantly. Moore said the move stronger was likely exaggerated by investors covering bets on loonie weakness, and the currency could fall back towards C$1.02 in the next week or so as focus turns to the global economy's potential mid-year soft patch. The Canadian dollar ended the session trading at C$1.0081 to the greenback, or 99.20 U.S. cents, compared to C$1.0075, or 99.26 U.S. cents, at Tuesday's North American close. The currency has gained roughly 1.8 percent in the last week, helped by more positive domestic data. "We have a mixed bag of things, we have better fundamental data, so retail sales and GDP helped," said Camilla Sutton, chief currency strategist at Scotiabank. Retail sales data for February surprised market participants last week, while stronger-than-expected gross domestic product data for February released on Tuesday backed up the view of a rebound. She said the currency found it difficult to move much more than a few cents either side of equal value with the greenback. "We trade close to parity, and we really struggle to move sustainably or substantially away from it," she said. "For every positive factor there's an offsetting negative factor." Prices for Canadian government debt were higher across the curve, with the two-year bond up more than a Canadian cent to yield 0.916 percent and the benchmark 10-year bond rising 16 Canadian cents to yield 1.682 percent.
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