Canadian forex review: C$ firms ahead of the weekend

By Commodity News Service Canada

WINNIPEG, Jan. 24 – The Canadian dollar firmed against the US dollar on Friday, seeing an upward correction ahead of the weekend, analysts said.

Short covering following a recent sharp drop in the value of the Canadian dollar was responsible for some of the upward movement.

Stronger gold prices were also supportive, though weakness in crude oil values was bearish for the Canadian currency.

The Bank of Canada’s dovish policy announcement on Wednesday continued to overhang the Canadian dollar, brokers said.

The Canadian currency closed at US$0.9031 or US$1=C$1.1073 on Friday, which compares with Thursday’s North American settlement of US$0.9010 or US$=C$1.1099.

Canadian inflation data was released on Friday, and fell in line with expectations. Statistics Canada reported that the Consumer Price Index (CPI) rose 1.2% in the 12 months to December, following an increase of 0.9% in November.

Canadian bonds closed little changed, as traders had mixed feelings about the Canadian inflation data release Friday, brokers said. The CPI gained from the month prior, but it is still well below the Bank of Canada’s target for inflation.

The two-year bond yielded 0.974% late Friday, from 0.971% late Thursday. The 10-year bond yielded 2.405%, from 2.409%. Bond yields fall as their prices rise.