By Commodity News Service Canada
WINNIPEG, Jan. 16 – The Canadian dollar was little changed relative to the US dollar on Friday, recovering from sharp losses seen earlier in the day.
Currency markets continued to be very volatile after the Swiss central bank’s recent unexpected decision to get rid of a previously imposed limit on the franc’s strength against the euro, brokers added.
The Canadian dollar closed at US$0.8356 or US$1=C$1.1968 on Friday, which compares with Thursday’s North American settlement of US$0.8358 or US$1=C$1.1964.
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The evening of positions ahead of the long weekend in the US was also creating some choppy activity. US markets will close for Martin Luther King Jr. Day on Monday, while Canadian markets will be open.
Traders were also being cautious ahead of next week’s Bank of Canada interest rate announcement, where they are expected to keep interest rates unchanged.
Ongoing expectations that the US Federal Reserve will raise interest rates before Canada does were overhanging the Canadian dollar.
Worries about weakness in crude oil harming the Canadian economy were also bearish, though the oil market was rebounding on Friday, providing support. Strength in gold was also underpinning the loonie.
Canadian bonds closed sharply lower on Friday, undermined by profit taking and strong US consumer confidence data, market watchers said.
The two-year bond yielded 0.872% late Friday, from 0.815% late Thursday. The 10-year bond yielded 1.532%, from 1.468%. Bond yields fall as their prices rise.
