CANADA FX DEBT-C$ gets relief against greenback; eyes on central bank
* Canadian dollar at C$1.0910 or 91.66 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Jan 16 (Reuters) - The Canadian dollar firmed against the greenback on Thursday as the loonie got some relief from its recent selloff, though investor focus was on next week's Bank of Canada meeting and the possibility the central bank could sound more dovish. The Canadian currency got some support from data that showed foreign investment in Canadian securities nearly doubled to C$8.66 billion ($7.94 billion) in November, with bond purchases reaching their second-highest level of the year. The loonie has been on a downward trend since late October when the Bank of Canada abandoned any talk of rate hikes in its policy statement after 18 months of signaling that tightening was on the horizon. The Canadian dollar entered 2014 with most analysts expecting the currency to weaken, but the swiftness of its drop has surprised some. Just two weeks into 2014, the U.S. dollar has appreciated nearly 3 percent against the Canadian currency. "The market has been waiting for a little steam to come off the top of this U.S. dollar-Canadian dollar rally we've seen," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. The Canadian dollar was at C$1.0910 to the greenback, or 91.66 U.S. cents, stronger than Wednesday's close of C$1.0945, or 91.37 U.S. cents. The loonie touched a more than four-year low on Wednesday. "At this point, I don't think it's unreasonable to see us move back into the C$1.08 level, we could continue to see a little bit of consolidation here," said Smith. "That said, I don't think there's a lot of room for the loonie to put in too many strong gains. The big risk on most traders' radar is going to be the Bank of Canada rate statement next week." After disappointing economic data last week, markets are speculating the Bank of Canada could sound more accommodative at its policy-setting meeting on Jan. 22. While Smith said he is not expecting the central bank to cut rates, dovish language in its statement could be the catalyst to send the Canadian dollar on its next leg lower. Economists expect the Bank of Canada will hold off raising rates until the second quarter of 2015, according to a Reuters poll. Canadian government bond prices were higher across the maturity curve, with the two-year up 2-1/2 Canadian cents to yield 1.056 percent and the benchmark 10-year up 30 Canadian cents to yield 2.544 percent.
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