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CANADA FX DEBT-C$ pulls back from 9-day high ahead of Fed decision

Published 2018-05-02, 09:23 a/m
© Reuters.  CANADA FX DEBT-C$ pulls back from 9-day high ahead of Fed decision
USD/CAD
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CL
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CA2YT=RR
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CA10YT=RR
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* Canadian dollar at C$1.2843, or 77.86 U.S. cents

* Loonie touches its strongest since April 23 at C$1.2803

* Bond prices lower across the yield curve

* 10-year yield touches 2-1/2-month high at 2.387 percent

TORONTO, May 2 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Wednesday, pulling back from an earlier nine-day high as investors turned attention to the U.S. Federal Reserve interest rate decision.

At 9:13 a.m. EDT (1313 GMT), the Canadian dollar CAD=D4 was trading near flat at C$1.2843 to the greenback, or 77.86 U.S. cents.

The currency's weakest level of the session was C$1.2857, while it touched its strongest since April 23 at C$1.2803.

The loonie got a boost on Tuesday from data showing the economy expanded by a stronger-than-expected 0.4 percent in February and by remarks from Bank of Canada Governor Stephen Poloz.

Poloz said there is good reason to believe the central bank can manage the risks of Canada's high household debt, even as he signaled that interest rate hikes will continue, increasing the cost of that debt. addition to high household debt, the Bank of Canada has worried about an uncertain outlook for trade.

U.S. Trade Representative Robert Lighthizer said on Tuesday that if a deal to revise the North American Free Trade Agreement cannot be reached with Canada and Mexico in about three weeks, its approval by the U.S. Congress could be in jeopardy. Fed is set to hold rates steady on Wednesday but will likely further encourage expectations that it will lift borrowing costs in June on the back of rising inflation and low unemployment. price of oil, one of Canada's major exports, surrendered early gains after evidence of further increases in U.S. shale supply and a rise in Iranian exports ahead of a possible renewal of U.S. sanctions on Tehran. crude CLc1 prices were down 0.2 percent at $67.13 a barrel.

Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 2.5 Canadian cents to yield 1.943 percent and the 10-year CA10YT=RR falling 21 Canadian cents to yield 2.365 percent.

The 10-year yield touched its highest intraday since Feb. 15 at 2.387 percent.

Canada's trade data for March is due on Thursday.

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