CANADA FX DEBT-C$ weakens in quiet pre-Christmas session
* Canadian dollar at C$1.0619 or 94.17 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, Dec 24 (Reuters) - The Canadian dollar slipped against the greenback on Tuesday in quiet trading ahead of the Christmas Day holiday as investors continued to expect longer-term weakness for the loonie. There are no Canadian economic releases scheduled until the new year, but U.S. data on Friday showed orders for long-lasting manufactured goods surged in November. Stronger growth in the United States, Canada's biggest trading partner, should ultimately be beneficial to Canada but the data failed to have much influence on the loonie. "There's little in the way of direction," said Gareth Sylvester, director at Klarity FX in San Francisco. The Canadian dollar was at C$1.0619 to the greenback, or 94.17 U.S. cents, weaker than Monday's close of C$1.0611, or 94.24 U.S. cents. Canadian bond and equity markets will be closed on Wednesday and Thursday for the Christmas and Boxing Day holidays. There is likely to be more weakness in store for the Canadian dollar in 2014, said Sylvester, who sees the loonie hitting the C$1.08 area in the first few months of the year. The currency has been hit in recent months by a more neutral policy shift by the Bank of Canada and the U.S. Federal Reserve's move last week to begin reducing its massive market-friendly stimulus. That stimulus has helped prop up the U.S. economy and its equity markets for much of 2013. The Canadian dollar touched a 3-1/2-year low against the U.S. currency in the wake of the Fed's decision but has since retraced some of those losses. It has also gained ground against several other major currencies. "There is reason to take heart because this market was expecting the Canadian dollar to be sold aggressively once the Federal Reserve began their tapering program," said Brad Schruder, director of foreign exchange sales at BMO Capital Markets in Toronto. "What you've seen so far is actually a very muted response to the beginning of tapering, and that has prompted a lot of investors that were already short the Canadian dollar to trim some of those positions." Even so, expectations that the loonie will weaken over the longer term are still firmly in play, Schruder said. Canadian government bond prices were lower across the maturity curve, with the two-year down 2 Canadian cents to yield 1.138 percent and the benchmark 10-year down 27 Canadian cents to yield 2.717 percent.
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