By Commodity News Service Canada
WINNIPEG, Jan. 28 – The Canadian dollar moved sharply lower on Wednesday, dropping below the 80 cents US mark.
Strength in the US dollar, after some investors interpreted the latest US Federal Reserve announcement as hawkish, was behind the softness. Though, other investors thought the announcement was more on the dovish side.
The US Federal Reserve was optimistic about labour market growth in the US, though showed signs of concern about economic problems in other parts of the world.
The Canadian dollar closed at US$0.7987 or US$1=C$1.2520 on Wednesday, which compares with Tuesday’s North American settlement of US$0.8062 or US$1=C$1.2404.
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Further downward pressure came from weakness in commodity prices on Wednesday, including gold. Crude oil values also fell below US$45.00 per barrel.
Ongoing worries about slow global economic growth and last week’s surprise interest rate cut by the Bank of Canada were also bearish.
Canadian bonds ended higher again on Wednesday, with worries about economic problems in the euro zone providing support, brokers said.
The two-year bond yielded 0.437% late Wednesday, from 0.493% late Tuesday. The 10-year bond yielded 1.349%, from 1.428%. Bond yields fall as their prices rise.
