By Commodity News Service Canada
WINNIPEG, Dec. 3 – The Canadian dollar moved higher relative to the US dollar on Wednesday, reacting to positive messaging from the Bank of Canada, analysts said.
While the Bank of Canada will keep interest rates unchanged, they also noted that Canadian inflation has risen by more than expected recently, adding that Canada’s economy is showing signs of a broadening recovery.
The Canadian dollar closed at US$0.8798 or US$1=C$1.1366 on Wednesday, which compares with Tuesday’s North American settlement of US$0.8777 or US$1=C$1.1394.
Sentiment that recent declines were overdone further underpinned the Canadian dollar, as did a rebound in crude oil values.
However, ongoing worries about slow economic growth ahead of Thursday’s European Central Bank policy meeting limited the loonie’s upside.
Canadian bonds closed mostly lower on Wednesday, reacting to the more hawkish than expected statement from the Bank of Canada, brokers said.
The two-year bond yielded 1.028% late Wednesday, from 1.010% late Tuesday. The 10-year bond yielded 1.950%, from 1.958%. Bond yields fall as their prices rise.
