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Reuters - CANADA FX DEBT-Canadian dollar weakens after FOMC, eyes now on Bank of Canada
Wednesday, 29 October 2014
The Canadian dollar weakened against the greenback on Wednesday after an upbeat statement by the U.S. Federal Reserve drove the U.S. dollar higher, but traders awaited Bank of Canada testimony that could strengthen the Canadian currency.
The Fed, as expected, announced the end of its stimulus program and said the U.S. economic recovery would remain on track despite a slowdown in many parts of the global economy, sparking a selloff in bond markets and boosting the greenback.
Traders in Canada were awaiting testimony by Bank of Canada Governor Stephen Poloz at the Senate banking committee. The appearance had been scheduled for last week but was canceled due to a gunman's attack on Parliament Hill.
"If (Poloz) ... talks a lot about the positives we're seeing in the U.S. economy, that should be a positive for the Canadian dollar to gain some ground. However if he focuses on the lack of global growth and the negative effect it could have on commodities, that could drive us back up through that C$1.12 level," said Ken Wills, currency strategist and broker at CanadianForex in Toronto.
The Canadian dollar ended the North American session at C$1.1191, or 89.36 U.S. cents, weaker than Tuesday's close at C$1.1171, or 89.52 U.S. cents. Earlier in the session it touched a three-week high of C$1.1122, it's strongest point since Oct. 9, on the back of stronger oil prices.
Wills said the fact that $80 seems to have held as a floor for oil prices in the short-term should be positive for Canada and other commodity-linked currencies. "It's looking more and more like value buyers are coming in at these levels, hopefully that floor will hold on oil. That's a key level for oil sands production (in Canada)," he said.
Poloz began his testimony at 4:15 p.m. EDT (2015 GMT). The central bank has kept its main policy rate at 1 percent since September 2010.
Canadian government bond prices were mostly weaker, with the two-year down 5.5 Canadian cents to yield 1.040 percent. The benchmark 10-year was down 26 Canadian cents to yield 2.058 percent.
From: Reuters
