By Commodity News Service Canada
WINNIPEG, August 4 – The Canadian dollar was down sharply against the US dollar, dropping below the psychological 76 cents US mark.
Comments from a US Federal Reserve official were behind the drop, as they noted the agency could hike interest rates as soon as next month.
The Canadian dollar closed at US$0.7587 or US$1=C$1.3180 on Tuesday, which compares with Friday’s North American settlement of US$0.7645 or US$1=C$1.3080. There was no Bank of Canada close on Monday as most of Canada was observing a Civic Holiday.
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Concerns about Canada entering a recession were bearish for the Canadian dollar, as it could lead to further interest rate cuts by the Bank of Canada.
However, a rebound in crude oil prices helped to limit the downside, as it is one of Canada’s biggest export products.
Canadian bonds were up slightly on Tuesday, but off the day’s highs after US Federal Reserve officials pointed to an interest rate hike next month, traders said.
The two-year bond yielded 0.405% on Tuesday, from 0.406% on Friday. The ten-year bond yield was at 1.426%, from 1.433%. Bond yields fall as their prices rise.
