Canadian forex review: C$ drops with crude oil

By Commodity News Service Canada

WINNIPEG, August 19 – The Canadian dollar dropped against the US dollar on Wednesday, following weakness in crude oil prices, which fell more than 4.5 per cent, analysts said.

The Canadian dollar closed at US$0.7628 or US$1=C$1.3110 on Wednesday, which compares with Tuesday’s North American settlement of US$0.7659 or US$1=C$1.3056.

Ongoing concerns about slow growth domestically, and persisting economic problems in other parts of the world, including China, were also bearish.

However, a dovish message from the US Federal Open Market Committee (FOMC) limited the downside. The FOMC said the US economy is showing improvement, but more substantiated growth will be needed to spark an interest rate increase.

Canadian bonds moved higher on Wednesday, reacting to the more dovish than expected comments from the FOMC, market watchers said.

The two-year bond yielded 0.371% on Wednesday, from 0.417% on Tuesday. The ten-year bond yield was at 1.313%, from 1.398%. Bond yields fall as their prices rise.