TORONTO: The Canadian dollar held steady against the greenback in muted trading on Tuesday, but saw more action against other currencies with the euro under pressure after the European Central Bank (ECB) cut interest rates to record lows last week.
"I think crossflows are acting as a bit of a restraint on USD/CAD. We think generally speaking, USD/CAD is looking quite supported in the C$1.08-figure area," said Shaun Osborne, chief currency strategist at TD Securities.
In addition to the rate cuts, the ECB also launched measures to pump money into the sluggish euro zone economy and pledged to do more if needed. The measures were aimed at easing pressure on the strong euro, which is threatening economic recovery and importing disinflation.
"The euro in general looks quite soft here, across the board ... The markets are slowly getting the messages here that the ECB doesn't want the euro higher," Osborne said.
The Canadian dollar was trading at C$1.0906 to the greenback, or 91.69 US cents, at 9:56 a.m. (1356 GMT), little changed from Monday's close of C$1.0908, or 91.68 US cents.
The currency was at around C$1.4776 against the European currency after Monday's close of C$1.4821, but it weakened against its commodity-currency peers, the Australian and New Zealand dollars .
Osborne, who expected the Canadian dollar to trade between C$1.0890 and C$10945 for the session, said the US dollar, historically, strengthens in June and said the Canadian dollar could move toward C$1.1050 in the coming weeks if it weakens past C$1.0930 in the near term.
Canadian government bond prices were weaker across the maturity curve, with the two-year down 1.2 Canadian cents to yield 1.076 percent and the benchmark 10-year was down 26 Canadian cents to yield 2.349 percent.
Comments
Comments are closed for this article.