Canadian forex review: C$ drops sharply

By Commodity News Service Canada

WINNIPEG, Jan. 28 – The Canadian dollar dropped sharply on Tuesday, losing more than a third of a cent against its US counterpart.

The Canadian currency closed at US$0.8964 or US$1=C$1.1156 on Tuesday, which compares with Monday’s North American settlement of US$0.8999 or US$=C$1.1112.

Economic growth concerns in emerging countries were behind some of the weakness seen in the value of the Canadian dollar, analysts said.

Declines seen in gold prices were also bearish, though firmness in crude oil values limited the loonie’s downside potential.

Traders were looking ahead to Wednesday, when the US Federal Reserve will decide whether or not to ease stimulus measures further.

Canadian bonds closed up slightly Tuesday. Traders were being cautious ahead of the US Federal Reserve announcement on Wednesday, participants said.

The two-year bond yielded 0.970% late Tuesday, from 0.987% late Monday. The 10-year bond yielded 2.419%, from 2.429%. Bond yields fall as their prices rise.