CANADA FX DEBT-C$ slips to 2-month low as US$ gains on Fed speculation

Reuters

* Canada dollar at C$1.0493 vs US$, or 95.30 U.S. cents

* Fall vs US dollar comes amid the greenback's broad gains

* Expectations grow that Fed will trim stimulus soon

By Alastair Sharp

TORONTO, Nov 12 (Reuters) - The Canadian dollar weakened to

a two-month low against the U.S. currency in early trade on

Tuesday as speculation that the Federal Reserve is closer to

trimming its monetary stimulus lent support to the greenback.

Robust jobs and economic growth data from south of the

border released last week has bolstered the view that the Fed

could soon cut back on its $85 billion-a-month in bond buying,

perhaps even as soon as at its December meeting.

Adding to broad U.S. dollar strength against a basket of

currencies, the European Central Bank last week cut interest

rates in the euro zone to a record low.

"We've had a big shift last week. We had the ECB show itself

to be aggressive and we had data in the U.S. much stronger than

expected, and we have globally an environment of disinflation,"

said Camilla Sutton, chief currency strategist at Scotiabank.

"All three of those things come together to support a stronger

U.S. dollar."

At 9:20 a.m. (1420 GMT) the Canadian dollar was

trading at C$1.0493 to the greenback, or 95.30 U.S. cents,

compared with C$1.0475, or 95.47 U.S. cents, at Monday's North

American close.

The two-year bond was off 2 Canadian cents to

yield 1.139 percent, while the benchmark 10-year bond

fell 22 Canadian cents to yield 2.637 percent.

Scotia's Sutton said the biggest event on this week's

calendar is Thursday's Senate hearing of Fed Vice Chair Janet

Yellen, who has been nominated by President Barack Obama to

succeed Fed Chairman Ben Bernanke when his term expires in

January.

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