Canadian forex review: C$ firms

By Commodity News Service Canada

WINNIPEG, August 23 – The Canadian dollar firmed against its US counterpart on Friday, after falling to fresh lows below the 95 cents US market earlier in the day.

Early weakness was attributed to the release disappointing Canadian inflation data Friday morning. Statistics Canada reported that the Canadian Consumer Price Index rose 1.3% in the 12 months to July, which fell below expectations of a 2% increase.

But, some bargain hunting at the lows and the release of disappointing US economic data helped to Canadian dollar close the day on a positive note.

The US government reported that sales of newly built homes in the US decreased by 13.4% in July, making it the lowest level in nine months. Any weak US economic data makes it possible that the US Federal Reserve will hold off a little bit longer on easing out of stimulus programs.

The Canadian currency was quoted at US$0.9523, or US$1=C$1.0501 at the close on Friday, which compares with Thursday’s North American close of US$0.9509, or US$=C$1.0516.

Canadian bonds moved higher on Friday, following the rally seen in the US Treasury market, which was sparked by disappointing US home sales data.

The two-year bond yielded 1.191% late Friday, from 1.202% late Thursday. The 10-year bond yielded 2.694%, from 2.739% Bond yields fall as their prices rise.