By Commodity News Service Canada
WINNIPEG, Feb. 26 – The Canadian dollar closed sharply lower against the US dollar on Thursday, falling back below the 80 cents US mark.
A sharp drop in crude oil values was behind the softness, as it reinforced worries that weak oil prices are slowing Canadian economic growth, analysts said.
The Canadian dollar closed at US$0.7983 or US$1=C$1.2527 on Thursday, which compares with Wednesday’s North American settlement of US$0.8050 or US$1=C$1.2423.
General strength in the US dollar index and profit taking on recent gains in the Canadian dollar further undermined the currency.
Canadian inflation data was better than expected, but still on the weak side. The consumer price index dropped by 0.2 per cent in January, mainly due lower gas prices, Statistics Canada said. Pre-report guesses called for a drop of 0.4 per cent.
Canadian bonds ended lower on Thursday, reacting to the slightly better than expected inflation data from Statistics Canada, brokers said.
The two-year bond yielded 0.510% Thursday, from 0.475% late Wednesday. The 10-year bond yielded 1.359%, from 1.328%. Bond yields rise as their prices fall.
