Canadian Forex Review: C$ Firms

By Commodity News Service Canada

Winnipeg – January 22/13 – CNS – The Canadian dollar was
trading at a firmer level versus the US currency in late North
American activity on Tuesday. The minor upswing in the value of
the Canadian currency was associated with favourable economic
data from the US as well as to the advances posted in global
crude oil, market watchers said.

General strength in the North American equity sector also
encouraged some investor demand for the Canadian unit, brokers

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said.

The Canadian currency late in the afternoon was quoted at
C$0.9918 (100.82 US cents). This compares with Monday’s late
North American quote of C$0.9932 (100.68 US cents).

US existing home sales in December fell by 1.0% to 4.94
million annualized units from a revised 4.99 million units. The
figure was under expectations of a rise to 5.10 million units.

However, existing home sales in the US were 12.8% above
year-ago levels, while average sales in the fourth quarter of
2012 increased by 21.6% at an annualized rate from the third
quarter.

Separately, Canadian retail sales figures for November were
better-than-expected, rising by 0.2% to 39.44 billion Canadian
dollars ($39.71 billion). The figures were led by gains in the
autos and electronic goods sub-sectors and were ahead of

expectations of a flat performance.

The Canadian dollar was kept within its current trading
range ranges ahead of the Bank of Canada’s policy rate decision
and Monetary Policy Report, both scheduled for release Wednesday.

Market participants anticipated that the central bank will
stand pat on its interest rate at 1.00%, analysts said.

Canadian bonds finished with advances across the curve on
Tuesday following a softer reading of the US housing market that
sent investors into safe-haven assets ahead of a key Bank of
Canada announcement, market watchers said.

Canada’s two-year bond yield was at 1.178% Tuesday, from
1.190% late Monday. The 10-year bond yields 1.914%, from 1.934%.
Bond yields move inversely to bond prices.

Canadian bonds aren’t expected to have a significant
reaction to the release of the Bank of Canada’s policy rate
announcement and Monetary Policy Report Wednesday morning.
END

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