Canadian Forex Review: C$ Eases

 By Commodity News Service Canada

Winnipeg – December 27/12 – CNS – The Canadian dollar was
trading at a slightly weaker level versus the US currency in late
North American activity on Thursday. The easing of the Canadian
unit against the US currency was associated in part to concern
there may not be a deal put in place to deal with the ‘fiscal
cliff’ the US Government is facing, market watchers said.
Weak consumer confidence in the US also added to the bearish
sentiment seen in the Canadian unit on Thursday, brokers said.
The Canadian currency late in the afternoon was quoted at
C$0.9945 (100.45 US cents). This compares with Wednesday’s late
North American quote of C$0.9942 (100.58 US cents).
The US consumer confidence index fell to 65.1, well below
expectations of a reading of 70.0, which analysts said was mainly
due to pessimism surrounding the US budget negotiations.
The weakness in Canadian dollar was tempered in part by the
general strength displayed by global crude oil, brokers said.
The Canadian dollar also pared losses during the afternoon
after news that the US House of Representatives will reconvene
Sunday to attempt a deal to resolve the US budget standoff by
year’s end.
There were no Canadian data releases on Thursday and none
are scheduled for Friday,
Canadian bonds finished mixed along the yield curve on
Thursday with short-term notes down and the longer-dated issues
moving to firmer ground.
Canada’s two-year bond yield is at 1.137% Thursday, compared
with 1.126% late Wednesday. The 10-year bond yields 1.794%, down
from 1.815%. Bond yields move inversely to bond prices.
The longer-term maturities outperformed the rest of the
market, with investors growing increasingly concerned that US
legislators will fail to come to a budget agreement by year-end.
With no Canadian data released Thursday, Canada’s
fixed-income market took most of its cues from the US Treasury
notes.
Canadian bonds ended Thursday’s session in positive
territory but pared gains after news that the House of
Representatives will reconvene Sunday to try to strike a deal to
pass a budget agreement by year-end.
END