Canadian forex review: C$ closes higher

By Commodity News Service Canada

WINNIPEG, Jan. 16 – The Canadian dollar was higher against the US dollar on Thursday, as the currency continued to stabilize after falling sharply recently, analysts said.

Disappointing US inflation data was supportive for the loonie. The US government reported that inflation was up to only 1.5 per cent on an annualized basis in December, below the US Federal Reserve’s 2.5 per cent target. Lower inflation may mean the US Federal Reserve holds back on further stimulus easing measures.

The Canadian currency closed at US$0.9153 or US$1=C$1.0925 on Thursday, which compares with Wednesday’s North American settlement of US$0.9137 or US$=C$1.0945.

Spillover support from the gains seen in crude oil and copper prices was also bullish. But, gold prices were weaker, which limited the Canadian dollar’s upside.

Traders were looking ahead to next week, when the Bank of Canada makes its next interest rate announcement and will give a clearer look at the growth outlook for the country.

Canadian bonds closed higher on Thursday, aided by disappointing inflation data out of the US, brokers said.

The two-year bond yielded 1.041% late Thursday, from 1.068% late Wednesday. The 10-year bond yielded 2.521%, from 2.581%. Bond yields fall as their prices rise.