By Commodity News Service Canada
Winnipeg – April 17/13 – CNS – The Canadian dollar was
trading at a weaker level versus the US currency in late North
American activity on Wednesday. Global economic worries sent
investors bailing out of risky assets, such as the Canadian
dollar, market watchers said.
The Canadian currency late in the afternoon was quoted at
C$1.0260 (97.46 US cents). This compares with Tuesday’s late
North American quote of C$1.0205 (97.99 US cents).
The losses posted in the North American equity sector and
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The downswing in the Canadian currency also was linked to
the Bank of Canada’s decision to downgrade its growth forecasts
significantly while maintaining its conditional tightening bias,
analysts said.
The Bank of Canada kept its policy rate at 1.00%, a level
the central bank said “will likely remain appropriate for a
period of time,” but also indicated some monetary tightening will
eventually be required.
Meanwhile, the central bank slashed its economic
projections, with growth in the first quarter of the year now
expected to come in at 1.5% from its January forecast of 2.3%,
while second quarter growth is now forecast to hit 1.8% from the
previous 2.7%.
The central bank’s acknowledgement that the economy is
operating below capacity and the substantial downgrading of its
growth forecasts pave the way for the bank to retreat further
from the prospect of raising interest rates.
Canadian bonds ended higher along the yield curve on
Wednesday as investors retreated from risky assets and sought the
relative safety of government bonds, market watchers said.
Canada’s two-year bond yield was at 0.933% late Wednesday,
from 0.938% late Tuesday. The 10-year bond yield was at 1.711%,
from 1.734%. Bond yields move inversely to bond prices.
END
