Canadian Forex Review: C$ Bounces Off Three-Year Low

By Commodity News Service Canada

WINNIPEG, Dec. 19 – The Canadian dollar closed firmer against its US counterpart on Thursday, seeing a corrective bounce after falling to a three-year low.

Some support came from expectations that the US Federal Reserve will keep interest rates low for longer while they taper out of stimulus, analysts said.

The Canadian currency closed at US$0.9376 or US$1=C$1.0666 on Thursday, which compares with Wednesday’s North American settlement of US$0.9355 or US$=C$1.0689.

Spillover support from the gains in crude oil values also helped to underpin the loonie. However, gold prices were down sharply, which was bearish.

Canadian bonds were lower on Thursday, as traders continued to focus on Wednesday’s US Federal Reserve announcement that they plan to cut back on their bond buying program starting next month, brokers said.

The two-year bond yielded 1.137% late Thursday, from 1.106% late Wednesday. The 10-year bond yielded 2.704%, from 2.679%. Bond yields fall as their prices rise.