By Commodity News Service Canada
WINNIPEG, July 15 – The Canadian dollar ended sharply lower against the US dollar Wednesday, reacting to news that the Bank of Canada made another cut to interest rates, analysts said.
The Bank of Canada set its key interest rate at 0.50 per cent, down from the previous 0.75 per cent, hoping to help stimulate economic growth in light of recent unfavourable data.
The Canadian dollar closed at US$0.7740 or US$1=C$1.2920 on Wednesday, which compares with Tuesday’s North American settlement of US$0.7849 or US$1=C$1.2740.
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Spillover pressure on the Canadian currency also came from the sell-off in crude oil, which is one of Canada’s biggest exports.
Canadian manufacturing data came in below expectations Wednesday, further weighing on the loonie. Statistics Canada said adjusted manufacturing sales were up 0.1 per cent in May, below expectations of a 0.3 per cent rise.
Canadian bonds were up sharply on Wednesday, as traders flocked to safe haven assets after the Bank of Canada’s interest rate cut announcement, brokers said.
The two-year bond yielded 0.396% on Wednesday, from 0.458% on Tuesday. The ten-year bond yield was at 1.587%, from 1.648%. Bond yields fall as their prices rise.
