Tuesday January 27, 2009 - 22:43:47 GMT
Share This Story
Reuters - www.reuters.com
Forex Market News - CANADA FX DEBT-C$ weaker; little changed after budget
* C$ weaker after rising for four straight sessions
* Currency unchanged after release of federal budget
* Bonds mostly higher, follow U.S. market
By Jennifer Kwan
TORONTO, Jan 27 (Reuters) - The Canadian dollar weakened
slightly against the U.S. currency on Tuesday, pressured by
sagging oil and metal prices, while the federal government's
budget had little impact on the currency.
The weakness followed four straight sessions of gains
against the greenback, largely due to firmer commodity prices
and easing risk aversion.
Canadian bond prices were largely higher on Tuesday,
following the U.S. Treasury market higher after recent pressure
due to persistent concern about swelling supply.
The Canadian dollar officially closed at C$1.2263 to the
U.S. dollar, or 81.55 U.S. cents, down from C$1.2241 to the
U.S. dollar, or 81.69 U.S. cents, on Monday.
Shortly after 4 p.m. (2100 GMT), the Conservative
government unveiled a budget and stimulus package that promised
billions in tax cuts and spending to help pull the economy out
of recession, laying out plans for a budget deficit for the
first time after 11 straight years of surplus. [ID:nN27408307]
The official release of the budget had a negligible impact
on the Canadian currency, said Shane Enright, currency
strategist at CIBC World Markets.
"The news was very well telegraphed," said Enright.
Beginning late last week, government officials began
unveiling details of the budget, a rare move that analysts said
was aimed at preparing markets for the fiscal plan.
"I think probably the bigger potential reaction for the
currency would be when we get a sense of if the Liberals are
willing to stand behind (the budget)," said Enright.
"You won't get, necessarily, currency strength should they
come out and support it. My guess is you'd probably get some
currency weakness if they don't."
The commodity-tied currency came under some pressure from
the price of crude CLc1, which settled lower at $41.58 a
barrel on demand concerns. [ID:nSP178421] Gold and most base
metals were also lower. [ID:nLR469501]
The currency felt little impact from a speech by Bank of
Canada Governor Mark Carney, who tried to allay fears that
Canada may be headed into a deflationary spiral after the bank
projected falling prices in the second and third quarters of
this year. [ID:nN27455580]
There were no major surprises in Carney's speech, said
Charmaine Buskas, senior economics strategist at TD
"It's just a reminder that the Canadian economy is
under pressure and that inflation is poised for softness in the
near term," Buskas said.
BONDS MOSTLY HIGHER
Canadian bond prices were largely higher, following the
U.S. market, which made gains as demand concerns eased after a
successful auction. [ID:nN27459457]
Dealers have fled U.S. bonds on concerns about the impact
of the large amount of new debt that is expected to be issued
in the United States to fund government programs to stimulate
Also in unveiling the budget, the Canadian government said
on Tuesday it would reintroduce the three-year bond, last
issued in 1996-97, as it seeks to raise C$101 billion in fiscal
The two-year bond slipped 1 Canadian cents to C$102.59 to
yield 1.319 percent, while the 10-year bond was up 15 Canadian
cents to C$110.90 to yield 2.908 percent.
The 30-year bond climbed 85 Canadian cents to yield 3.680
percent. In the United States, the 30-year Treasury yielded
(Reporting by Jennifer Kwan; editing by Rob Wilson)
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
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."