By Commodity News Service Canada
Winnipeg – January 2/13 – CNS – The Canadian dollar was
trading at a firmer level versus the US currency in late North
American activity on Wednesday. Much of the upswing in the value
of the Canadian currency was associated with the late hour New
Year’s Day congressional budget compromise that is expected to
steer the US economy away from the so-called fiscal-cliff, market
watchers said.
The fiscal cliff is a series of tax increases and spending
cuts that many feared would plunge the US economy back into
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The budget compromise passed late Tuesday blocked most
impending tax increases and postponed spending cuts, while
raising taxes on the wealthiest 2% of Americans. The deal fell
short of the grand bargain that many were hoping for, however,
leaving numerous issues unresolved–the debt ceiling and spending
cuts among them.
The Canadian currency late in the afternoon was quoted at
C$0.9858 (101.44 US cents). This compares with Monday’s late
North American quote of C$0.9935 (100.64 US cents).
Additional strength in the US dollar was garnered from the
jump in global crude oil values as well as by the upturn in the
North American equity sector, brokers said.
Some technically based buying was also evident in the
Canadian currency during the session, further bolstering its
value, analysts said.
Canadian bonds finished with sharp declines across the yield
curve on Wednesday, as investors celebrated a late New Year’s Day
US budget deal designed to keep the US economy from careening off
the edge of the so-called fiscal cliff.
Canada’s two-year bond yield was at 1.174% late Wednesday,
from 1.140% late Monday. The bond market was closed Tuesday for
the Jan. 1 holiday. The 10-year bond, meanwhile, yielded 1.874%
late Wednesday, from 1.795% late Monday. The 30-year bond yielded
2.428%, from 2.359%. Bond yields move inversely to bond prices.
END
