By Commodity News Service Canada
Winnipeg – June 18/13 – 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 dollar was associated with positioning ahead of
the US Federal Reserve’s announcement Wednesday, market watchers
said.
The Canadian currency late in the afternoon was quoted at
C$1.0212 (97.92 US cents). This compares with Monday’s late
North American quote of C$1.0177,(98.26 US cents).
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There was no Canadian data released Tuesday, and the
Canadian dollar moved broadly with a mixed reading of US data.
Consumer prices in the US rose by a seasonally adjusted 0.1% in
May, just slightly below consensus on 0.2%, while the 1.4% annual
rate matched economists forecast.
Separately, housing starts for May increased 6.8% from April
to 914,000 units, below expectations of a 11.4% gain to 950,000
units. The amount of new housing permits fell 3.1% to an annual
pace of 974,000 in May, mostly inline with economists estimate
for a rate of 973,000.
If the US Fed doesn’t signal any tapering to its latest
round of quantitative easing, it’s likely that the US dollar will
broadly gain against its major currency peers, analysts said.
The Fed’s rate-setting committee started a two-day meeting
Canadian bonds finished on a weaker footing along the yield
curve Tuesday as fixed-income investors took their positions out
of government issues ahead of a key US Federal Reserve
announcement Wednesday, market watchers said.
Canada’s two-year bond yield is at 1.112% Tuesday from
1.109% Monday. The 10-year bond yielded 2.157% from 2.150%. Bond
yields move inversely to bond prices.
Bonds inched lower in relatively healthy trading Tuesday, as
traders looked ahead to a key meeting of Fed officials that will
provide the market with clarity whether the central bank will
begin to taper its bond-buying program in the coming months.
Newly appointed Bank of Canada Governor Stephen Poloz will
also be making his first public appearance on Wednesday
afternoon, with a speech and press conference that will be
closely watched for his views on Canadian monetary policy.
END
