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Canadian forex review: C$ drops down more than a cent

| 1 min read

By Commodity News Service Canada

WINNIPEG, Jan. 7 – The Canadian dollar closed sharply lower on Tuesday, losing more than a cent against its US counterpart.

The Canadian dollar’s drop was linked to a combination of disappointing Canadian trade data, and surprisingly strong trade data from the US, analysts said.

Statistics Canada reported that Canada’s trade deficit with the world widened to C$940 million in November, from C$908 million in October. Expectations called for a C$100 million deficit in November.

The US government reported a trade deficit of US$34.3 billion in November, narrowing in by 12.9 per cent from October.

Chart-based selling on the way down was also bearish, as was spillover pressure from the losses seen in gold prices, traders added.

The Canadian currency closed at US$0.9283 or US$1=C$1.0772 on Tuesday, which compares with Monday’s North American settlement of US$0.9388 or US$=C$1.0652.

Canadian bonds moved higher in reaction to the release of the unexpectedly weak Canadian trade deficit data, participants said.

The two-year bond yielded 1.110% late Tuesday, from 1.133% late Monday. The 10-year bond yielded 2.678%, from 2.717%. Bond yields fall as their prices rise.