TORONTO: The Canadian dollar eased marginally on Friday against its US counterpart as investors positioned themselves ahead of next week's Federal Reserve meeting, where the Fed is widely expected to announce a modest scale-back of its stimulus program.
Following last Friday's weaker than expected US non-farm payrolls data, many traders and analysts expect the US central bank to announce a modest $10 billion reduction in its $85 billion monthly bond-buying program.
However, the uncertainty surrounding the Fed was further fueled by a Japanese newspaper report that said Lawrence Summers was tipped to replace Ben Bernanke as the next chief of the Federal Reserve.
"The Nikkei article about Summers being the next Fed chairmen lifted the (US) dollar across the board. The movement against CAD was really small," said Greg Anderson, global head of foreign exchange strategy for BMO Capital Markets in New York.
"We're stuck until we get the Fed decision next Wednesday. That could easily move us one to two big figures, depending on the outcome. And I think everybody just wants to square up and stay neutral heading into that event."
The Canadian dollar was trading at C$1.0333 versus the US dollar, or 96.78 US cents at 9:13 a.m. (1313 GMT), just a few basis points away from Thursday's North American close at C$1.0325, or 96.85 US cents.
The Canadian dollar, underperforming against most of its currency counterparts except for the Australian dollar , was not expected to trade beyond the day's highs and lows of around C$1.0320 and C$1.0350, said Anderson.
Prices for Canadian government bonds were higher across the maturity curve, with the two-year bond up 1 Canadian cent to yield 1.280 percent and the benchmark 10-year bond rising 14 Canadian cents to yield 2.765 percent.
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