Canadian forex review: C$ eases

By Commodity News Service Canada

WINNIPEG, Dec. 17 – The Canadian dollar closed weaker against the US dollar on Tuesday amid nervousness ahead of Wednesday’s US Federal Reserve announcement, analysts said.

It is generally expected that the US Federal Reserve won’t back out of stimulus programs until next year, but it is possible that they announce they’re pulling back during Wednesday’s announcement.

The Canadian currency closed at US$0.9425 or US$1=C$1.0610 on Tuesday, which compares with Monday’s North American settlement of US$0.9446 or US$=C$1.0587.

Spillover pressure from the declines seen in commodities, including crude oil, gold and copper, also weighed on the loonie.

However, the downside was limited by positive Canadian manufacturing data. According to Statistics Canada, manufacturing sales in Canada increased 1 per cent to C$50.1 billion in October, beating expectations of a 0.3% decline.

Canadian bonds were higher on Tuesday, as traders positioned themselves ahead of Wednesdays’ US Federal Reserve meeting, brokers said.

The two-year bond yielded 1.109% late Tuesday, from 1.116% late Monday. The 10-year bond yielded 2.643%, from 2.677%. Bond yields fall as their prices rise.