Canada Afternoon: C$ Ends Lower As Oil, Gold Prices Falter
The Canadian dollar ended lower Tuesday, as falling oil and gold prices combined with technical factors to put an end to a week-long period of narrow range trading.
The U.S. dollar was trading at C$1.1714 at 3:35 p.m. EST (2035 GMT), from C$1.1649 at 8:00 a.m. EST (1300 GMT), and from C$1.1643 late Monday.
The Canadian dollar’s main influences Tuesday were the sizeable declines experienced by both crude oil and gold prices, though Canadian economic data released early in the day also presented no obstacles to the currency’s downtrend by re-affirming that the Bank of Canada isn’t likely to consider moving interest rates anytime soon.
Canada’s core consumer price index was up 0.1% on a monthly basis and rose 2.1% year-on-year in January, compared with the December rates of down 0.2% monthly and up 2.0% year-on-year.
The all-items CPI rose 0.1% for the month and was up 1.2% from a year ago. In December, the monthly increase in the all-items index was 0.2% and the yearly increase was 1.6%.
Canada’s leading economic indicator was later reported to have risen beyond forecasts by 0.5% in January.
In line with the commodity price weakness, the Canadian dollar initially broke through the C$1.1670 weak extreme of its recent trading range, and later sank beyond the C$1.1700 figure under the influence of stop-loss selling.
According to some currency watchers, Tuesday’s modest decline for the Canadian dollar may prove short-lived, particularly given the softer global U.S. dollar tone that has recently come into play in the wake of lukewarm U.S. data releases.
The U.S. will release its own January CPI report Wednesday, and that combined with other events such as the global reaction to the Bank of Japan’s impending interest rate announcement could help reverse Tuesday’s drop for the Canadian currency.
“I don’t think this will be long-lived, especially with the U.S. consumer price index report tomorrow expected to be weak, in keeping with recent U.S. releases that have been below expectations and resulted in U.S. dollar weakness,” said Jack Spitz, director of foreign exchange at National Bank in Toronto. “I tend to think today was a good buying opportunity to get long Canadian dollars again.”
These are the exchange rates at 3:35 p.m. EST (2035 GMT), 8:00 a.m. EST (1300 GMT), and late Monday.
USD/CAD 1.1714 1.1649 1.1643 EUR/CAD 1.5390 1.5307 1.5318
CAD/JPY 102.48 103.11 102.80
Copyright 2007 Dow Jones & Company, Inc.
