By Commodity News Service Canada
WINNIPEG, Jan. 6 – The Canadian dollar was sharply lower on Tuesday, losing more than half a cent and falling well below the 85 cents US mark.
A falling crude oil market was behind the Canadian currency’s softness, with oil values falling below US$50 per barrel.
The Canadian dollar closed at US$0.8455 or US$1=C$1.1828 on Tuesday, which compares with Monday’s North American settlement of US$0.8511 or US$1=C$1.1749.
Traders were liquidating riskier assets in favour of safe-haven investments due to the drop in oil, which was bearish for the Canadian dollar.
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However, positive Chinese economic data was limiting the declines. HSBC’s Chinese services sector index unexpectedly rose to a three month high of 53.4.
There was no significant Canadian economic data to report on Tuesday. Traders were looking ahead to employment data, due out on Friday.
Canadian bonds closed sharply higher again on Tuesday, with weakness in crude oil values and a move away from risky assets behind the advances, market watchers said.
The two-year bond yielded 0.959% late Tuesday, from 0.981% late Monday. The 10-year bond yielded 1.643%, from 1.694%. Bond yields fall as their prices rise.
