Canadian forex review: C$ loses almost a full cent

By Commodity News Service Canada

WINNIPEG, Jan. 22 – The Canadian dollar closed sharply lower, losing almost a full cent against the US dollar on Wednesday.

A dovish Bank of Canada (BoC) policy announcement sparked the downward price slide, analysts said. The BoC left interest rates unchanged, but said it will take longer for the Canadian economy to return to normal levels of inflation.

The Canadian currency closed at US$0.9019 or US$1=C$1.1088 on Wednesday, which compares with Tuesday’s North American settlement of US$0.9114 or US$=C$1.0972.

Sharply weaker gold prices also spilled over to weigh on the value of the Canadian dollar, though stronger crude oil prices were supportive.

Traders were looking ahead to Thursday’s Canadian retail sales data for November, which are expected to have increased by 0.2%.

Canadian bonds closed higher on Wednesday, supported by the Bank of Canada’s move towards a more dovish stance on the Canadian economy, traders said.

The two-year bond yielded 1.008% late Wednesday, from 1.031% late Tuesday. The 10-year bond yielded 2.486%, from 2.508%. Bond yields fall as their prices rise.