Canadian forex review: C$ down sharply

By Commodity News Service Canada

WINNIPEG, Oct. 23 – The Canadian dollar was sharply weaker compared to its US counterpart on Wednesday, losing more than three-quarters of a cent.

The Canadian currency was quoted at US$0.9630 or US$1=C$1.0384 at the close on Wednesday, which compares with Tuesday’s North American close of US$0.9719 or US$=C$1.0289.

Much of the weakness was linked to a Bank of Canada announcement, which left interest rates in the country unchanged, analysts said. BoC Governor, Stephen Poloz, also said that interest rates will remain below 2 per cent until the end of 2015, which was longer than previously forecasted.

News that China’s central bank could raise interest levels soon, which may slow global economic growth, also fuelled some of the Canadian dollar’s declines.

Adding to the bearish tone was spillover pressure from the losses seen in commodities, including crude oil, gold and copper.

Canadian bonds were higher, supported by the Bank of Canada’s announcement, which showed interest rates would remain low for longer than originally anticipated due to slow economic growth, traders said.

The two-year bond yielded 1.108% late Wednesday, from 1.169% late Tuesday. The 10-year bond yielded 2.430%, from 2.482%. Bond yields fall as their prices rise.