By Commodity News Service Canada
Winnipeg – May 22/13 – CNS – The Canadian dollar was trading
at a significantly weaker level versus the US currency in late
North American activity on Wednesday. The Canadian unit hit an
eleven month low during the session with the downswing
facilitated by the dovish comments made by US Federal Reserve
Chairman Ben Bernanke, market watchers said.
The Canadian currency late in the afternoon was quoted at
C$1.0365 (96.47 US cents). This compares with Tuesday’s late
North American quote of C$1.0268 (97.39 US cents).
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The Canadian dollar was taken for a downhill ride Wednesday,
with traders responding more to global market trends than to
domestic data, and ended the day as one of the big losers in the
currency market.
The loonie hit a new 2013 low, moving to a level last seen
in June 2012 after comments from US Fed Chairman Ben Bernanke
that appeared to hold back on tapering the central bank’s
stimulus program, but noted that a cutback could be possible in a
few months.
Weakness in the Canadian dollar also came in response to a
retail sales report that showed March data was unchanged at 39.55
billion Canadian dollars ($38.16 billion), following a 0.7% gain
in February. Economists expected Canada to report a slight 0.1%
gain in monthly retail sales, according to the Royal Bank of
Canadian bonds ended on a weaker footing along the yield
curve on Wednesday as investors moved broadly out of safe-haven
assets after comments from US Federal Reserve Chairman Ben
Bernanke highlighted that the US central bank’s stimulus program
isn’t tapering off just yet, market watchers said.
Canada’s two-year bond yield was at 1.031% Wednesday, from
1.009% Tuesday. The 10-year bond yielded 1.965%, from 1.912%.
Bond yields move inversely to bond prices.
In testimony before the Joint Economic Committee, Bernanke
didn’t provide any signs that a near-term pullback on the central
bank accommodative policy was forthcoming, but noted a cutback
could be possible in a few months.
Comments from his prepared remarks also suggested it was
premature to tighten interest rate policy briefly lifted
territory following the session’s question and answer period,
where Mr. Bernanke indicated tapering of the program would be
possible in a few months, if warranted by data.
END
