Wednesday November 14, 2007 - 22:41:25 GMT
Share This Story
Reuters - www.reuters.com
Forex Market News - Canadian dollar finishes lower after BoC comments
By Frank Pingue
TORONTO, Nov 14 (Reuters) - The Canadian dollar finished
lower versus the U.S. currency on Wednesday as comments from a
Bank of Canada official and the pace of recent rises convinced
the market to pocket gains.
Canadian bond prices finished higher ahead of Canadian
manufacturing shipments data due on Thursday that could offer
clues as to whether the U.S. subprime mortgage meltdown has cut
into demand for Canadian exports.
The Canadian dollar closed at at US$1.0348, valuing each
U.S. dollar at 96.64 Canadian cents, down from Tuesday's close
of US$1.0426, or 95.91 Canadian cents.
It also marked a sharp turnaround from early in the session
when the Canadian dollar rallied to US$1.0496, or 95.27 U.S.
cents, before declining steadily toward the close.
The Canadian dollar started its descent after a Bank of
Canada official offered a slightly stronger warning on the
economic impact of the strength of the Canadian currency, which
last week hit a modern-day high above US$1.10.
Bank of Canada Deputy Governor Paul Jenkins said that if
recent levels of the Canadian dollar were to persist, the risk
is that "output and inflation would be significantly lower".
While his remarks were similar to those made by Bank of
Canada officials in the past, the word "significantly" was new
and could have convinced some investors to unwind positions.
Also weighing on the currency were recent writedown
warnings by several Canadian banks linked to U.S. subprime
Overall, some market experts felt it was just time for the
Canadian dollar to unwind after a largely uninterrupted rally
since breaching parity with the U.S. dollar in September.
"More than anything else, I think the market has really
been taking this chance to take a deep breath and consolidate,"
said Amarjit Sahota, chief currency strategist at HFIX Plc in
According to Sahota, comments made by U.S. Federal Reserve
Chairman Ben Bernanke, who spoke on Wednesday about federal
open market committee communications, did not have much impact
on the direction of the currency.
Bond prices finished higher as the market positioned itself
ahead of Canadian manufacturing data on Thursday.
Figures that showed Canada's composite leading indicator
rose 0.1 percent, missing analysts' expectations of a 0.3
percent rise, had little impact on the bond market.
The indicator's rise was hampered by the lofty Canadian
dollar and the U.S. economic slowdown, which have hurt Canada's
The two-year bond rose 4 Canadian cents to C$100.60 to
yield 3.937 percent, while the 10-year bond rose 23 Canadian
cent to C$98.43 to yield 4.201 percent.
The yield spread between the two-year and 10-year bond
moved to 26.4 basis points from 26.3 at the previous close.
The 30-year bond gained 59 Canadian cents to C$111.74 to
yield 4.294 percent. In the United States, the 30-year Treasury
yielded 4.601 percent.
The three-month when-issued T-bill yielded 4.06 percent, up
from 4.05 percent at the previous close.
(Reporting by Frank Pingue: Editing by Peter Galloway)
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."