Canadian forex review: C$ down sharply

By Commodity News Service Canada

WINNIPEG, Dec. 12 – The Canadian dollar was down sharply against its US counterpart on Thursday, as Bank of Canada Governor Stephen Poloz raised concerns about Canadian inflation rates, noting that interest rates may be left unchanged for another two years, analysts said.

The Canadian currency was quoted at US$0.9398 or US$1=C$1.0640 at the close on Thursday, which compares with Wednesday’s North American settlement of US$0.9440 or US$=C$1.0593.

Speculation that the US Federal Reserve could back out of stimulus programs soon due to positive retail sales data in the US added to the bearish tone.

Spillover pressure from the losses seen in commodities, including crude oil and gold, also weighed on the value of the Canadian dollar.

Canadian bonds moved lower, but Poloz’s Bank of Canada announcement that interest rates will stay unchanged for a long time limited the downside, market watchers said.

The two-year bond yielded 1.101% late Thursday, from 1.096% late Wednesday. The 10-year bond yielded 2.660%, from 2.644%. Bond yields fall as their prices rise.