Canadian forex review: C$ down sharply

By Commodity News Service Canada

WINNIPEG, Dec. 27 – The Canadian dollar closed sharply lower against its US counterpart on Friday amid quiet holiday activity.

The Canadian currency closed at US$0.9342 or US$1=C$1.0704 on Friday, which compares with Tuesday’s North American settlement of US$0.9417 or US$=C$1.0619. Canadian markets were closed Wednesday and Thursday for Christmas and Boxing Day.

Expectations that the economic recovery will be better in the US than in Canada over the next two years helped push the Canadian dollar to lower ground, analysts said.

The Bank of Canada’s decision to keep Canadian interest rates low during the 2014 calendar year, and expectations that rates won’t increase until mid-2015, were also bearish.

However, spillover support from the advances seen in gold and crude oil, two of Canada’s biggest exports, limited the downside.

Canadian bonds ended lower, following the recent downward movement seen in the US Treasury market, industry participants noted.

The two-year bond yielded 1.153% late Friday, from 1.138% late Tuesday. The 10-year bond yielded 2.788%, from 2.720%. Bond yields fall as their prices rise.