C$ steady as markets await Fed, eye oil and rouble risks

TORONTO: The Canadian dollar was little changed against the greenback on Wednesday as markets waited to hear what kind of tone the US Federal Reserve will adopt in its policy statement later in the session.

Markets are trying to gauge when the Fed will start to raise interest rates and have zeroed in on its often-used phrase "considerable time" to see if it keeps that language in its final policy statement of 2014. The statement is set to be released at the end of a two-day Fed meeting at 2 p.m. EST (1900 GMT).

"A lot of potential volatility ahead, but for now, a lot of consolidation ahead of that. A calm before the storm," said Greg Moore, senior currency strategist at RBC Capital Markets, noting that the Canadian dollar will be taking its cues from moves in the US dollar.

"(The Fed's statement) is probably one of the biggest event risks on the calendar into the end of the year. There's high hopes for decent shift from the message from the Fed."

At 9:18 a.m. or (1418 GMT), the Canadian dollar was at C$1.1632 to the greenback, or 85.97 US cents, little changed from Tuesday's finish of C$1.1636, or 85.94 US cents.

The Canadian currency, which remains near lows not seen in 5-1/2 years, has been pulled down by plummeting crude prices. Canada is a major exporter of oil and the commodity has lost nearly half its value over the last six months on an excess of supply.

The Russian rouble, hit by cheap oil and Western sanctions over Ukraine, fell dramatically against the US dollar earlier this week after a failed attempt to prop the currency sparked a crisis in confidence in Russia's central bank.

Any fresh developments in the oil-price retreat or the fall of the rouble could divert some attention from the Fed, Moore said.

Canadian government bond prices were mixed across the maturity curve with most short term treasury bills slightly higher and longer term bonds lower. The two-year bond was off 1.5 Canadian cents to yield 0.960 percent and the benchmark 10-year was down 7 Canadian cents to yield 1.756 percent.