Investors should buy Australia's dollar against Canada's as the interest-rate gap between the two nations may shrink less than traders expect, TD Securities said. Australia's dollar is the third-worst performer among the 16 most-active currencies versus Canada's dollar in the past month as investors bet the Reserve Bank of Australia will lower borrowing costs by more than the Bank of Canada in coming months. The yield advantage of two-year Australian government bonds over similar-maturity Canadian bonds shrank to 2.98 percentage points from 3 percentage points on Aug. 29. ``Possibly too much has been priced into the Australian interest-rate easing cycle and we could see some weakness in Canada, so interest rates may not narrow as much as people expect,'' said Joshua Williamson, a senior strategist at TD Securities in Sydney. ``If we do see the BOC cut and the RBA not cut as much as the market expects, that's going to have some significant re-pricing in terms of the cross-currencies.'' ...
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