By Commodity News Service Canada
WINNIPEG, March 4 – The Canadian dollar closed sharply higher against the US dollar Wednesday, gaining nearly half a cent after the Bank of Canada decided to keep interest rates unchanged at 0.75 per cent.
The central banked also noted that financial conditions have improved since the rate cut made in January, which is a sign that Canada’s economic situation isn’t as bad as previously thought.
The Canadian dollar closed at US$0.8054 or US$1=C$1.2416 on Wednesday, which compares with Tuesday’s North American settlement of US$0.8006 or US$1=C$1.2490.
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Spillover support for the Canadian dollar also came from the strength seen in crude oil, as well as some disappointing US employment data.
However, weakness in gold values and ongoing worries about economic problems in Europe and China helped to limit the upside, analysts said.
Canadian bonds moved sharply lower on Wednesday, reacting to the Bank of Canada’s decision to keep interest rates unchanged, brokers said.
The two-year bond yielded 0.613% Wednesday, from 0.501% late Tuesday. The 10-year bond yielded 1.509%, from 1.428%. Bond yields rise as their prices fall.
