Canadian forex review: C$ drops more than a cent

By Commodity News Service Canada

WINNIPEG, Feb. 19 – The Canadian dollar moved sharply lower on Wednesday, losing more than a cent against the US dollar.

The Canadian dollar closed at US$0.9024 or US$1=C$1.1082 on Wednesday, which compares with Tuesday’s North American settlement of US$0.9132 or US$=C$1.0951.

Disappointing wholesale sales data, which highlighted weakness in the Canadian economy, was responsible for the Canadian dollar’s plunge, analysts said.

According to Statistics Canada, wholesale sales dropped 1.4 per cent, to C$49.6 billion in December, while expectations called for a 0.4% decline. Sales were at their lowest level in six months, StatsCan added.

Disappointing US housing starts data were also bearish, with starts falling to an annualized rate of 880,000, below expectations of 899,000.

Canadian bonds were mostly lower on Wednesday. Early gains were erased after the US Federal Reserve released minutes from its latest meeting and revealed that continued strength is expected in the US economy.

The two-year bond yielded 1.001% late Wednesday, from 0.996% late Tuesday. The 10-year bond yielded 2.443%, from 2.444%. Bond yields fall as their prices rise.