By Jennifer Kwan
TORONTO, Oct 27 (Reuters) - Canada's dollar retreated against the U.S. currency on Wednesday as the greenback rose broadly on speculation the U.S. Federal Reserve would take a measured approach to quantitative easing.
The U.S. dollar's rise pushed it into positive territory against major currencies for the year as investors continued to unwind bets against the greenback before a highly anticipated Federal Reserve meeting next week.
Doubts over how aggressively the Fed is going to be with another round of asset-buying to stimulate a faltering recovery also weighed on global equities and commodities.
'It comes down to the U.S. dollar, and the U.S. dollar strength or weakness is simply a barometer of the market's assumption around quantitative easing at the next Fed meeting,' said Jack Spitz, managing director of foreign exchange at National Bank Financial.
'The current market position is to be short U.S. dollars and the U.S. dollar's gains over the past few days have reflected a pulling back of risk,' he said.
The Canadian dollar ended at C$1.0287 to the U.S. dollar, or 97.21 U.S. cents, down from Tuesday's finish at C$1.0242 to the U.S. dollar, or 97.64 U.S. cents.
The U.S. central bank has aired several times that it will attempt to boost growth by pumping more money into the economy through government bond purchases, commonly referred to as quantitative easing. That has pushed the dollar and U.S. bond yields lower.
But the greenback reversed course this week on uncertainty about how much the Fed will spend and whether the new measures will be carried out swiftly or phased in over time.
The Wall Street Journal reported on Wednesday that the Fed is likely to unveil an asset purchase program next week worth a few hundred billion dollars over several months, and that officials wanted to avoid a 'shock and awe' style approach.
'As the market scales back its expectations on QE (quantitative easing), it scales back its short dollar positions,' said Spitz.
BONDS LOWER
Canadian government bond prices softened, tracking U.S. Treasuries lower as traders trimmed bets on the size of possible asset buying by the Fed.
'The move is generally in line with what we saw in the U.S.,' said Kam Bath, fixed income strategist at RBC Capital markets.
'It's people paring down their expectations of Fed stimulus next week,' he added. 'That would explain the underperformance at the belly of the curve because that's where expectations for Fed purchases were largely concentrated.'
The two-year bond fell 5 Canadian cents to yield
1.451 percent, while the 10
year bond was off 58 Canadian cents to yield 2.884 percent.
(Additional reporting by Claire Sibonney; editing by Rob Wilson) ============================================================== FOR CANADIAN MARKETS NEWS, CLICK ON CODES IN BRACKETS: Canadian dollar and bonds report................... TSX market report........................................ Headlines from global forex markets .................. Bank of Canada stories................................... Bank of Canada weekly T-bill auction.................. Bank of Canada securities auctions.................... Bank of Canada interest rate story.................... Reuters monthly Canadian dollar poll.. Canadian interest rate poll.......................... Reuters G7 quarterly economy poll................... Weekly economic data poll............................. Reuters global stocks poll (Canada)... New Canadian debt issues............................. Top News: Canada .................................... Today in Canada..................................... Canadian debt and money news ................... FOR CANADIAN MARKETS DATA, CLICK ON CODES IN BRACKETS: Real-time Canadian economic RICS...................... Canadian dollar quote........................... Canadian bonds quote....... Canadian money market quote.................. New Canadian debt issues........................... Canada-Treasury spread rates....................... Canadian Debt and Forex speed guide........... Canadian Equities speed guide...................... S&P/TSX Composite index ............................. FOR MAIN GLOBAL MARKET DATA AND MARKET REPORTS: FTSE Eurotop 300 ..... European report ....... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. Frankfurt market stories CAC-40................. Paris market stories... World Indices..................................... Global markets report............................ Foreign exchange...................................... Non-deliverable forward currencies ................... Oil.................................................... US Treasuries......................................... International bonds................................... Gold....................................... or CRB index of commodity futures........................ All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ World central bank news Economic Forecasts... Official rates... Forex Diary....... Top events........ Diaries........... Diaries Index........ Press Digests..... Polls on G7 economies.. Keywords: MARKETS CANADA/DOLLAR BONDS (jennifer.kwan@thomsonreuters.com; +1 416 941 8178; Reuters Messaging: jennifer.kwan.reuters.net@reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TORONTO, Oct 27 (Reuters) - Canada's dollar retreated against the U.S. currency on Wednesday as the greenback rose broadly on speculation the U.S. Federal Reserve would take a measured approach to quantitative easing.
The U.S. dollar's rise pushed it into positive territory against major currencies for the year as investors continued to unwind bets against the greenback before a highly anticipated Federal Reserve meeting next week.
Doubts over how aggressively the Fed is going to be with another round of asset-buying to stimulate a faltering recovery also weighed on global equities and commodities.
'It comes down to the U.S. dollar, and the U.S. dollar strength or weakness is simply a barometer of the market's assumption around quantitative easing at the next Fed meeting,' said Jack Spitz, managing director of foreign exchange at National Bank Financial.
'The current market position is to be short U.S. dollars and the U.S. dollar's gains over the past few days have reflected a pulling back of risk,' he said.
The Canadian dollar ended at C$1.0287 to the U.S. dollar, or 97.21 U.S. cents, down from Tuesday's finish at C$1.0242 to the U.S. dollar, or 97.64 U.S. cents.
The U.S. central bank has aired several times that it will attempt to boost growth by pumping more money into the economy through government bond purchases, commonly referred to as quantitative easing. That has pushed the dollar and U.S. bond yields lower.
But the greenback reversed course this week on uncertainty about how much the Fed will spend and whether the new measures will be carried out swiftly or phased in over time.
The Wall Street Journal reported on Wednesday that the Fed is likely to unveil an asset purchase program next week worth a few hundred billion dollars over several months, and that officials wanted to avoid a 'shock and awe' style approach.
'As the market scales back its expectations on QE (quantitative easing), it scales back its short dollar positions,' said Spitz.
BONDS LOWER
Canadian government bond prices softened, tracking U.S. Treasuries lower as traders trimmed bets on the size of possible asset buying by the Fed.
'The move is generally in line with what we saw in the U.S.,' said Kam Bath, fixed income strategist at RBC Capital markets.
'It's people paring down their expectations of Fed stimulus next week,' he added. 'That would explain the underperformance at the belly of the curve because that's where expectations for Fed purchases were largely concentrated.'
The two-year bond fell 5 Canadian cents to yield
1.451 percent, while the 10
year bond was off 58 Canadian cents to yield 2.884 percent.
(Additional reporting by Claire Sibonney; editing by Rob Wilson) ============================================================== FOR CANADIAN MARKETS NEWS, CLICK ON CODES IN BRACKETS: Canadian dollar and bonds report................... TSX market report........................................ Headlines from global forex markets .................. Bank of Canada stories................................... Bank of Canada weekly T-bill auction.................. Bank of Canada securities auctions.................... Bank of Canada interest rate story.................... Reuters monthly Canadian dollar poll.. Canadian interest rate poll.......................... Reuters G7 quarterly economy poll................... Weekly economic data poll............................. Reuters global stocks poll (Canada)... New Canadian debt issues............................. Top News: Canada .................................... Today in Canada..................................... Canadian debt and money news ................... FOR CANADIAN MARKETS DATA, CLICK ON CODES IN BRACKETS: Real-time Canadian economic RICS...................... Canadian dollar quote........................... Canadian bonds quote....... Canadian money market quote.................. New Canadian debt issues........................... Canada-Treasury spread rates....................... Canadian Debt and Forex speed guide........... Canadian Equities speed guide...................... S&P/TSX Composite index ............................. FOR MAIN GLOBAL MARKET DATA AND MARKET REPORTS: FTSE Eurotop 300 ..... European report ....... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. Frankfurt market stories CAC-40................. Paris market stories... World Indices..................................... Global markets report............................ Foreign exchange...................................... Non-deliverable forward currencies ................... Oil.................................................... US Treasuries......................................... International bonds................................... Gold....................................... or CRB index of commodity futures........................ All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ World central bank news Economic Forecasts... Official rates... Forex Diary....... Top events........ Diaries........... Diaries Index........ Press Digests..... Polls on G7 economies.. Keywords: MARKETS CANADA/DOLLAR BONDS (jennifer.kwan@thomsonreuters.com; +1 416 941 8178; Reuters Messaging: jennifer.kwan.reuters.net@reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.