Canadian forex review: C$ firmer ahead of the weekend

By Commodity News Service Canada

WINNIPEG, Jan. 31 – The Canadian dollar finished firmer on Friday, recovering after dropping to a four-and-a-half-year low earlier in the day. Traders were said to be covering their short positions ahead of the weekend, according to analysts.

The Canadian currency closed at US$0.8978 or US$1=C$1.1138 on Friday, which compares with Thursday’s North American settlement of US$0.8956 or US$=C$1.1166.

News that Canada’s budget deficit is shrinking was bullish. The Canadian government’s finance department reported that the Canadian budget showed a deficit of C$613 million in November 2013, which compares to C$1.7 billion in November 2012.

Canadian domestic gross product data (GDP) released on Friday was slightly supportive, as it fell in line with expectations. Statistics Canada reported that GDP rose 0.2 per cent in November, down slightly from the 0.3 per cent gain in October.

Strength in gold prices further underpinned the loonie, though lower crude oil values were bearish, market watchers said.

Canadian bonds closed higher on Friday, following the upward movement seen in the US Treasury market, participants said.

The two-year bond yielded 0.953% late Friday, from 0.971% late Thursday. The 10-year bond yielded 2.340%, from 2.376%. Bond yields fall as their prices rise.