CANADA FX DEBT-C$ weaker as focus turns to Bernanke testimony

Tue May 21, 2013 10:06am EDT

* C$ at C$1.0293 versus US$ or 97.15 U.S. cents
    * Fed chairman Bernanke to speak on Wednesday
    * Bond prices mixed

    By Solarina Ho
    TORONTO, May 21 (Reuters) - The Canadian dollar was weaker
against the U.S. dollar on Tuesday following a holiday in Canada
and as its counterpart rallied ahead of testimony by U.S.
Federal Reserve Chairman Ben Bernanke on Wednesday. 
    It was little changed from Friday's close, when Canadian
equity and bond markets were last open.
    Bernanke will be testifying before Congress on Wednesday and
market watchers will be parsing his comments for hints on the
Fed's bond-buying plans. Speculation the U.S. central bank will
trim bond purchases sooner than expected has mounted given signs
of improvement in the U.S. labor market and recent comments by
some Fed officials. 
    "It seems like they've got a bit of a sustained PR campaign
going on it, and the market is reacting accordingly," said John
Curran, senior vice president at CanadianForex.
    Curran noted that Bernanke himself has not made any comments
so far, however. The U.S. dollar may weaken off if Bernanke
reiterates his ultra-loose monetary policy stance, but it is
likely to strengthen further if he provides some hint that asset
purchases could be wound down later this year.
    At 9:25 a.m. (1325 GMT), the Canadian dollar was
trading at C$1.0293 versus the U.S. dollar, or 97.15 U.S. cents,
weaker than Monday's finish at C$1.0241, or 97.65 U.S. cents.
    Canadian equity and bond markets were closed on Monday due
to the Victoria Day holiday, leaving most trading desks at
Canadian banks unstaffed.
    It held steady from Friday's North American finish at
C$1.0291, or 97.17 U.S. cents, after shedding some 1.8 percent
against the greenback last week.
    The currency, which was mostly underperforming its key
counterparts, was likely to trade between C$1.0250 and C$1.0325
on Tuesday, according to Curran.
    The price of Canadian government debt were mixed, with gains
on the shorter end. The 2-year bond was flat, with a
yield of 1.010 percent, while the benchmark 10-year bond
 slipped 9 Canadian cents to yield 1.937 percent.
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