Canadian forex review: C$ slightly firmer

By Commodity News Service Canada

WINNIPEG, August 6 – The Canadian dollar firmed slightly against its US counterpart on Tuesday, lifted by better than expected Canadian trade data, analysts said.

Statistics Canada reported the Canada’s trade deficit with the world narrowed unexpectedly in June to C$469 million, from C$781 in May. Growing exports were behind the narrowing deficit.

The Canadian currency was quoted at US$0.9638, or US$1=C$1.0376 at the close on Tuesday, which compares with Friday’s North American close of US$0.9625, or US$=C$1.0390. Canadian markets were closed Monday to observe a civic holiday.

However, positive trade data in the US limited the loonie’s upside potential, as it made it more likely that the US Federal Reserve will ease out of stimulus programs soon.

Spill over pressure from the sharp losses seen in commodities, including crude oil and gold, was also bearish for the loonie.

Canadian bonds moved lower, undermined by ideas that the US Federal Reserve will be able to cut back on stimulus programs sooner rather than later, brokers said.

The two-year bond yielded 1.158% late Tuesday, from 1.161% late Friday. The 10-year bond yielded 2.525%, from 2.494%. Bond yields fall as their prices rise.