CANADA FX DEBT-C$ hits five-week high as market eyes Fed, data

Mon Jul 29, 2013 4:57pm EDT

* C$ at C$1.0260 vs US$ or 97.47 U.S. cents
    * Fed policy debate in focus
    * U.S. jobs and North American GDP data due this week
    * Bond prices mixed

    By Solarina Ho
    TORONTO, July 29 (Reuters) - The Canadian dollar
strengthened to a five-week high against the U.S. dollar on
Monday as investors positioned themselves ahead of a batch of
key North American economic data and a U.S. Federal Reserve
meeting this week.
    As well as the Fed, the European Central Bank and the Bank
of England are due to make statements this week. All are
expected to repeat or refine "forward guidance" that will say
that borrowing costs will remain extraordinarily low as long as
economic growth stays sub-par and inflation poses no threat.
 
    "The CAD is outperforming, really ... it's doing fairly well
in an environment of fairly mixed, but somewhat stronger U.S.
dollar. A lot of the event risks come later in the week," said
Camilla Sutton, chief currency strategist at Scotiabank.
    The Fed will be most closely scrutinized, having signaled
plans to begin phasing out its money-printing stimulus program
this year. Most economists are eyeing a September start but
markets have scaled back views of any aggressive changes.     
    "Everyone is waiting for the Fed, the FOMC (Federal Open
Market Committee) meeting on Wednesday, which should dictate the
next month or so of trading," said John Curran, senior vice
president at CanadianForex.
    The Canadian dollar, which was outperforming nearly
all of its key currency counterparts, closed at C$1.0260 versus
the U.S. dollar, or 97.47 U.S. cents. That was a bit firmer than
Friday's North American session close of C$1.0273 versus the
U.S. dollar, or 97.34 U.S. cents.
    The Canadian dollar hit an intraday high of C$1.0253, its
strongest level since June 19.
    Curran said he expects the currency to trade in a tight
range until Wednesday.
    "The Canadian dollar seems to be getting back to
middle-of-the-road levels for recent months. I would look for
anything toward the C$1.02 area to be well supported for the
U.S. dollar - people wanting to sell Canadian dollars there,"
Curran said.
    "On the top side, it would have to break above C$1.035 to
get interesting," he added.
    Canada and the United States, its largest export market, 
will release economic growth data this week, while the United
States also will issue July jobs data.
    Prices for Canadian government debt were mixed. The two-year
bond fell 3.5 Canadian cent to yield 1.166 percent,
while the benchmark 10-year bond fell 38 Canadian
cents to yield 2.497 percent.
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