By Commodity News Service Canada
Winnipeg – February 26/13 – CNS – The Canadian dollar was
trading at a fractionally firmer level versus the US currency in
late North American activity on Tuesday. The minor upswing in the
value of the Canadian dollar came amid mixed views on statements
made by US Federal Reserve Chairman Ben Bernanke during the
session, market watchers said.
The US dollar moved to a new seven-month high against the
Canadian dollar early Tuesday as Bernanke reiterated his
commitment to the Fed’s bond-buying program, arguing that the
benefits of stimulus still outweigh the risks.
However, the upward push on the US dollar was short-lived as
such bond-buying programs, quantitative easing as they are known,
are generally seen as corrosive to a currency, because they are
viewed in the market as printing money. The US dollar retracement
in turn helped to firm the Canadian currency, brokers said.
The Canadian currency late in the afternoon was quoted at
C$1.0260 (97.46 US cents). This compares with Monday’s late North
American quote of C$1.0265 (97.41 US cents).
The upside in the Canadian unit was also helped along by the
general firmness of the North American equity sector. Small
declines in global crude oil values did slow the recovery in the
Canadian bonds pushed higher across the yield curve on
Tuesday as US Federal Reserve Chairman Ben Bernanke signalled
that the Fed’s bond-buying stimulus policies would continue,
market watchers said..
Canada’s two-year bond yield was at 1.007% Tuesday, from
1.017% Monday. The 10-year bond yielded 1.853%, from 1.865%. Bond
yields move inversely to bond prices.
Bernanke, who was testifying in Washington Tuesday, defended
the Fed’s open-ended bond-buying program, saying the associated
risks don’t outweigh the benefit of “promoting a stronger
economic recovery and more-rapid job creation.”
Minutes from the January meeting of the US Fed’s
policy-setting body revealed a growing divide among officials
about the future of the Fed’s open-ended bond-buying program.
Some had called for an earlier end to the program, saying it
creating more risks than benefits for the economy and financial
Bernanke’s testimony Tuesday suggested continued demand for
Treasurys to keep up with the Fed’s purchasing program.