Forex Market News - CANADA FX DEBT-C$ falls, bonds rise as more rate cuts seen
Tue Dec 9, 2008 5:05pm EST
* Bank of Canada cuts key rate to 50-yr low of 1.5 pct
* Canadian dollar finishes volatile session lower
* Bonds rise, short end gains as BoC declares recession
By Ka Yan Ng
TORONTO, Dec 9 (Reuters) - The Canadian dollar fell more than half a U.S. cent on Tuesday after the Bank of Canada cut its key interest rate by a bigger than expected 75 basis points and declared for the first time that the Canadian economy is entering a recession.
Bond prices rose sharply, reflecting expectations of further rate cuts as the economy weakens.
The currency finished at C$1.2646 to the U.S. dollar, or 79.08 U.S. cents, down from C$1.2540 to the U.S. dollar, or 79.74 U.S. cents, at Monday's close.
The Canadian dollar fell as low as C$1.2743, or 78.47 U.S. cents, after the rate decision, from C$1.2640, just before the Bank of Canada cut its overnight rate to a 50-year low of 1.5 percent. [ID:nN092350]
Most analysts had expected a cut of at least a 50 basis points but talk had been growing that there would be more aggressive action.
The Canadian dollar was able to claw back some of the losses by midday as the U.S. dollar was unable to hold on to its early gains against other major currencies, particularly the euro. Then it promptly turned around again as the focus returned to the outlook for the global economy.
"We did see a little bit of a knee-jerk reaction to push dollar/Canada higher after the announcement itself, but we quickly ran out of steam up ahead of the C$1.2750 level," said George Davis, chief technical analyst at RBC Capital Markets.
"Normally, the things that would have allowed the Canadian dollar to weaken further, those variables were ignored to a certain extent."
Usual factors that influence the Canadian dollar, such as the price of crude, were set aside temporarily in favor of concentrating on the economic outlook from the Bank of Canada.
While it was the first clear admission by the central bank that Canada is joining most major economies in sliding into recession, the Bank of Canada also said it sees a "broader and deeper" global downturn than previously anticipated.
"Virtually all market watchers are expecting central banks to cut interest rates," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
"At issue now is the forward-looking guidance. (Bank of Canada Governor Mark) Carney's guidance, as expressed in the communique, was extremely bearish."
Unlike previous statements, the bank did not explicitly signal further cuts were necessary but it appeared to leave the door open to additional easing in 2009. That triggered a push lower in Canadian bond yields, particularly in the interest-rate sensitive short end of the curve.
Some forecasters estimate the overnight rate will fall another 50 basis points to hit a floor of 1 percent, with risk for further easing below that level if the economy suffers a protracted downturn.
The two-year bond rose 6 Canadian cents to C$102.31 to yield 1.556 percent. The 10-year bond rose 3 Canadian cents to C$109.53 to yield 3.082 percent.
The yield spread between the two- and 10-year bond was at 155 basis points, up from 151 basis points at the previous close.
The 30-year bond climbed 40 Canadian cents to C$121.80 to yield 3.748 percent. In the United States, the 30-year treasury yielded 3.0358 percent. (Reporting by Ka Yan Ng; editing by Rob Wilson)
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Actionable trading levels delivered to YOUR charts in real-time.
Tue 19 June 2018 A 12:30 US- House Permits/Starts Wed 20 June 2018 A 14:00 US- Existing Homes Sales A 14:30 US- EIA Crude Thu 21 June 2018 AA 11:00 GB- Bank of England Decision A 12:30 US- Weekly Jobless Fri 22 June 2018 AFlash PMIs
John M. Bland, MBA co-founding Partner, Global-View.com
Global-View Affiliate Program
We are starting an affiliate program to market some of our products.
Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.
Put the word "affiliate" in the email subject line.
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.