CANADA FX DEBT-C$ softens as next week's Fed meeting, data in focus

Fri Jul 26, 2013 9:44am EDT

* C$ at C$1.0277 vs US$ or 97.30 U.S. cents
    * Fed policy debate, next week's jobs data in focus
    * Oil prices fall on China, U.S. output worries
    * Bond prices higher across curve

    By Solarina Ho
    TORONTO, July 26 (Reuters) - The Canadian dollar eased on
Friday from a five-week high against the U.S. dollar, but traded
within a tight range as investors eyed economic data and a
Federal Reserve meeting next week for guidance on the U.S.
economy.
    "We had a little volatility earlier in the week but that's
pretty much been sapped out of the market," said Blake
Jespersen, managing director, foreign exchange sales at BMO
Capital Markets.
    With a lack of economic data to drive direction, the
commodities-linked currency was pressured in part by weaker oil
prices, which fell on worries over a looming Chinese economic
slowdown and decades-high oil output in the United States. 
    At 9:17 a.m. (1317 GMT), the Canadian dollar was
trading at C$1.0277 versus the U.S. dollar, or 97.30 U.S. cents,
marginally off its North American session close at C$1.0264, or
97.43 U.S. cents on Thursday.
    The Canadian dollar, which was mixed against other major
currencies and trading within a narrow range on Friday, was
expected to be bound between C$1.0260 and C$1.0310.
    The greenback was broadly weaker after a Wall Street Journal
report said the U.S. central bank may debate changing its
forward guidance to emphasize that it will keep rates low for a
long time. The news prompted investors to trim bets on the
dollar gaining. 
    Next week, Canada and its largest export market will release
economic growth data, while the U.S. will also issue its July
data on the state of the labor market.
    "Everything the Fed says these days is extremely important
to the market and has been moving the market quite dramatically.
Fed is always the big event, but of course jobs on Friday will
also be key," said Jespersen.
    The price of Canadian government debt was higher across the
maturity curve. The two-year bond rose 1.8 Canadian
cents to yield 1.144 percent, while the benchmark 10-year bond
 rose 13 Canadian cents to yield 2.450 percent.
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