By Commodity News Service Canada
Winnipeg – March 20/13 – CNS – The Canadian dollar was
trading at a firmer level versus the US currency in late North
American activity on Wednesday. The upswing in the value of the
Canadian currency came amid lessened concerns about the euro-zone
debt crisis and sentiment the drop in the unit was too great,
market watchers said.
The Canadian currency late in the afternoon was quoted at
C$1.0257 (97.49 US cents). This compares with Tuesday’s late
North American quote of C$1.0270 (97.37 US cents).
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Much of the activity in the financial sector Wednesday was
focussed on the US Federal Reserve’s policy statement and
economic outlook, analysts said. The Fed statement did not point
to any end of its quantitative easing program despite recent
encouraging developments on the US economy.
However, participants reacted tepidly to the Fed’s news,
with investors moving sharply away from the US dollar.
Some support for the Canadian dollar was encouraged by the
advances seen in global crude oil values and in the North
American equity sector, brokers said.
The Canadian dollar was not expected to experience any major
moves ahead of the Canadian federal government’s budget, which
will be released after the market closes on Thursday.
Along with the federal budget, the main focus for the
Canadian dollar will be developments surrounding Cyprus’ ability
to secure a bailout and avoid a default.
Canadian bonds posted declines across the yield curve on
Wednesday after investors retreated out of safe-haven securities
as the market focused on a US Federal Reserve policy statement
that maintained the US central bank’s asset-purchase program,
market watchers said.
Canada’s two-year bond yield was at 0.985% Wednesday, from
0.960% Tuesday. The 10-year bond yielded 1.856%, from 1.821%.
Bond yields move inversely to bond prices.
Bond markets took their eyes off the latest developments in
Cyprus to focus on the Fed and its economic projections given the
recent wave of positive economic signs that the world’s largest
economy was beginning to turn a corner away from the recent
The Fed modestly upgraded its assessment of how the economy
is performing, with its near-term outlook for the US economy now
forecast to grow at a 2.3% to 2.8% pace this year, compared to
the previous expectations of a 2.3% to 3.0% gain.
Retail sales figures will also be released on Thursday
morning, with analysts expecting a 0.9% monthly gain in January,
according to economists at the Royal Bank of Canada.
END
