Canadian forex review: C$ drops sharply

By Commodity News Service Canada

WINNIPEG, August 7 – The Canadian dollar fell sharply against its US counterpart on Wednesday, as weak Canadian economic data weighed on its value, traders said.

Canadian contractors took out C$6.6 billion worth of building permits during the month of June, a 10.3% drop from May, Statistics Canada reported Wednesday.

The Canadian currency was quoted at US$0.9594, or US$1=C$1.0423 at the close on Wednesday, which compares with Tuesday’s North American close of US$0.9638, or US$=C$1.0376.

Spill over pressure from the losses seen in crude oil, one of Canada’s biggest export products, further weighed on the Canadian currency.

Ideas that the US Federal Reserve will work towards backing out of stimulus programs sooner rather than later, due to recent positive US economic data, added to the bearish tone.

Canadian bonds moved higher amid light activity. Weakness in outside equity markets provided some support, industry watchers said.

The two-year bond yielded 1.144% late Wednesday, from 1.153% late Tuesday. The 10-year bond yielded 2.503%, from 2.518%. Bond yields fall as their prices rise.