* Canadian dlr buoyant after c.bank hints at rate hike
* Loonie extends gains, touches highest since mid-April
* Sterling inches lower vs dollar
* Market awaits Fed's two-day policy meeting
(Adds comments, updates prices)
By Masayuki Kitano
SINGAPORE, June 13 The Canadian dollar rose to
its highest level in nearly two months on Tuesday, buoyed by
hawkish comments from Canada's central bank, while worries about
UK political uncertainty dented sterling.
At one point, the Canadian dollar was at its strongest
since April 17, at C$1.3274 per U.S. dollar, extending
gains after climbing more than 1 percent on Monday. The loonie
last traded at C$1.3293, up around 0.2 percent on the day.
Bank of Canada Senior Deputy Governor Carolyn Wilkins said
on Monday first-quarter growth was "pretty impressive" and that
signs economic growth was broadening would lead the central bank
to consider whether current low rates would still be required.
"She delivered a much more hawkish signal than we've seen
from the central bank in some time," said Sue Trinh, head of
Asia FX strategy for Royal Bank of Canada's Hong Kong branch.
"Bottom-line, odds of a rate hike by the end of the year
from the Bank of Canada have moved up considerably," Trinh said,
adding that markets were now pricing in more than a 50 percent
Sterling was still looking wobbly after the shock result of
Thursday's UK general election, which left Prime Minister
Theresa May short of a parliamentary majority that would have
strengthened her hand as Britain prepares for Brexit
negotiations with Europe.
The pound eased 0.1 percent to $1.2653, after
shedding 2.3 percent the previous two trading days.
"The prospect of further political uncertainty due to the
lack of an overall Conservative majority is likely to weigh on
sterling in the short term," said Jeremy Gatto, senior vice
president, trading, for Geneva-based boutique asset manager
On the other hand, the potential for "softer Brexit"
rhetoric in a market that is already short on sterling could
help support the currency over the medium-term, Gatto added.
The greenback was steady to firmer against the yen and the
euro ahead of the Federal Reserve's two-day policy meeting
starting later on Tuesday.
Against the yen, the dollar held steady at 109.97.
The euro eased 0.1 percent to $1.1193.
With the U.S. central bank widely expected to raise interest
rates, investors' focus will be on any fresh hints on the pace
of tightening in the months to come, and its assessment of the
economy and outlook on inflation.
Investors will also be watching for any fresh details on the
Fed's plans for trimming its balance sheet.
"Given that the minutes (of the last Fed meeting) contained
lots of details, one possible scenario is that there will be an
announcement in June and that it will start in September," said
Masafumi Yamamoto, chief currency strategist for Mizuho
Securities in Tokyo, referring to the Fed's possible balance
Elsewhere, the Bank of England is set to announce an
interest rate decision on Thursday, and the Bank of Japan holds
a policy meeting on Thursday and Friday.
(Editing by Jacqueline Wong and Richard Borsuk)