CANADA FX DEBT-Canada dollar little changed as focus moves to Fed

* Canadian dollar at C$1.0587, or 94.46 U.S. cents
    * Bond prices mixed across the maturity curve

    By Leah Schnurr
    TORONTO, Dec 16 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday as investors tried to
gauge where U.S. monetary policy is heading ahead of this week's
Federal Reserve policy meeting. 
    The Fed will release a statement at the end of its two-day
meeting from Dec. 17-18 with some in the market speculating the
it could announce the start of a wind-down of asset purchases.
The U.S. central bank is currently buying $85 billion a month in
bonds, which has been a major driver of global markets this
    "It's been a very indifferent trading session, a real lack
of commitment to take the market in either direction," said
Gareth Sylvester, director at Klarity FX in San Francisco.
    A recent Reuters poll of primary dealers showed the Fed is
expected to begin reducing its bond-buying program no later than
March, although a few firms thought the Fed could announce a
cutback as soon as this month. 
    "There is the potential for them to do something, but I
think the likelihood is they might just err on the side of
caution in terms of action. But the communique might be a bit
firmer, a bit more hawkish, really giving the market a very
clear signal that, in January or March, we'll see a Fed
tapering," Sylvester said.
    The Canadian dollar ended the North American
session at C$1.0587 to the greenback, or 94.46 U.S. cents,
modestly firmer than Monday's close of C$1.0595, or 94.38 U.S.
    A faster timetable for the Fed is seen as a negative for the
Canadian dollar because it is expected to reduce the appetite
for risk and benefit the U.S. currency.
    In addition to uncertainty about the Fed's plans, the loonie
has been hurt by a less hawkish Bank of Canada and softer oil
prices recently, all of which sent the currency to a 3-1/2-year
low at the beginning of the month.
    "Our base case is that they lay the foundation for tapering
in January," said Camilla Sutton, chief currency strategist at
Scotiabank in Toronto.
    "The one big piece that's likely to hold them back from
tapering is the disinflationary environment that the U.S.
economy is in."
    Even so, with the recent budget deal in Washington and
better-than-expected jobs data, the market seems to be
increasingly turning toward the potential for the Fed to start
winding down this week, said Sutton.
    At home, data showed foreign investment in Canadian
securities was roughly halved in October, with money market
holdings slumping. The loonie saw little reaction to the
    Canadian government bond prices were mixed across the
maturity curve, with the two-year down 1-1/2 Canadian
cents to yield 1.114 percent and the benchmark 10-year
 off 8 Canadian cents to yield 2.674 percent.