Canadian forex review: C$ closes lower

By Commodity News Service Canada

WINNIPEG, Jan. 21 – The Canadian dollar closed lower against the US dollar on Tuesday, as speculation that the US Federal Reserve will start to cut stimulus further weighed on the currency, analysts said.

The Canadian currency closed at US$0.9114 or US$1=C$1.0972 on Tuesday, which compares with Monday’s North American settlement of US$0.9132 or US$=C$1.0951.

Some of the losses were also attributed to weakness in gold prices, though stronger crude oil values were supportive.

Positive Canadian economic data also helped to limit the Canadian dollar’s downside. Statistics Canada reported that manufacturing sales increased 1.0% in November, beating expectations of a 0.3% jump.

Positioning ahead of Wednesday’s Bank of Canada policy report announcement was a feature of the activity, according to participants.

Canadian bonds closed lower on Tuesday, as traders liquidated positions following positive Canadian manufacturing data and ahead of the Bank of Canada’s policy report on Wednesday, brokers said.

The two-year bond yielded 1.024% late Tuesday, from 1.019% late Monday. The 10-year bond yielded 2.496%, from 2.491%. Bond yields fall as their prices rise.