Canadian Forex Review: C$ Eases

By Commodity News Service Canada


WINNIPEG, December 21 – The Canadian dollar eased against its US counterpart in late activity on Friday. Traders were avoiding riskier assets, including the Canadian dollar, due to concerns about the impending US ‘fiscal cliff’, analysts said.


US lawmakers have yet to come up with a solution to avoid the impending fiscal cliff in the US, which would see a new series of tax hikes implemented on January 1, 2013.


The Canadian currency late in the afternoon Friday was quoted at US$1.0066, or US$1=C$0.9934, which compares with Thursday’s North American close of US$1.0129, or US$=C$0.9873.


Soft Canadian inflation data was also responsible for some of the Canadian dollar’s weakness. Statistics Canada reported inflation in November was up 0.8%, a three-year low. The figure was also below expectations of a 1.1% increase.


Declining crude oil prices also undermined the value of the Canadian currency.


Canadian gross domestic product data released on Friday was in line with expectations, as it saw an increase of 0.1% in October.


Canadian bonds rallied on Friday, supported by fiscal cliff concerns and soft domestic inflation data, brokers said.


Yields for Canada’s 2-year bond were at 1.115% late Friday, which compares to 1.133% late Thursday. The 10-year bond was yielding 1.806%, from 1.844%. Bond yields move inversely to bond prices.