By Commodity News Service Canada
Winnipeg – March 19/13 – CNS – The Canadian dollar was
trading at a weaker level versus the US currency in late North
American activity on Tuesday. Much of the downswing in the value
of the Canadian currency reflected renewed economic worries in
the euro-zone as well as disappointing economic data in Canada,
market watchers said.
The Canadian currency late in the afternoon was quoted at
C$1.0296 (97.42 US cents). This compares with Monday’s late North
American quote of C$1.0223 (97.82 US cents).
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Market participants focussed on the uncertainty within the
euro zone with a proposed tax on bank deposit in Cyprus to help
stave off a default rejected by the country’s legislators,
brokers said.
The Canadian dollar was weighed lower after Cyprus’s
parliament rejected a controversial bank deposit levy Tuesday
afternoon, as policy makers will now scramble to salvage a deal
to avoid the country from defaulting on its debt and possibly
sending the island nation out of the euro zone.
Late Tuesday, the European Central Bank reaffirmed its
commitment to provide liquidity to Cyprus’s banks “within its
existing rules.”
The developments threaten to overshadow the US Federal
Reserve’s policy statement and update of its economic forecasts
on Wednesday.
The Canadian dollar also faced downward pressure during
Tuesday’s session after Canadian manufacturing shipments fell
0.2% in January from the previous month, the fourth decline in
the past five months and much weaker than expected.
Wholesale sales in January rose 0.3% to 49.01 billion
Canadian dollars ($47.70 billion) from the previous month, just
under expectations of a 0.4% advance.
The weaker economic indicators led some economists to see
Canada’s gross domestic product coming in around 0.1% for
January, a slight improvement from the 0.2% decline in December.
The losses displayed by globaol crude oil also added to the
bearish tone in the Canadian unit, analysts said.
Canadian bonds posted advances across the yield curve on
Tuesday with the strength associated with a combination of poor
domestic economic data and another day of uncertainty surrounding
default, market watchers said.
Canada’s two-year bond yield was at 0.968% Tuesday, from
0.984% Monday. The 10-year bond yielded 1.823%, from 1.860%. Bond
yields move inversely to bond prices.
END
