TORONTO: The Canadian dollar retreated to a six-month low against its US counterpart on Thursday, as the greenback powered higher on expectations that the Federal Reserve will likely end its bond-buying next month and begin raising the cost of borrowing next year.
The US dollar's winning streak, on track to be the longest since the early 1970s, comes as the Canadian dollar faces pressure at home. A series of dovish comments from the Bank of Canada helped push the currency to six-month lows in the previous session.
"The last few days has been a relatively challenging one for the Canadian dollar. Clearly we've seen a couple of attempts, or at least acknowledgements, from the Bank that they ... wouldn't be adverse to further cheapening up of the CAD," said Jeremy Stretch, head of foreign exchange strategy in London with CIBC World Markets.
Stretch, who said this would help Canadian exports, also noted that the short-term trend was still up for the US dollar, though the greenback was susceptible to some profit-taking as the end of the month and quarter approaches.
At 9:28 a.m. (1328 GMT), the Canadian dollar was at C$1.1110 to the greenback, or 90 US cents, weaker than Wednesday's close of C$1.1057, or 90.44 US cents.
The currency was still mostly outperforming its major currency counterparts, however.
"In the context of what we're seeing in terms of some other currencies against the US dollar, you can argue that it's actually holding in comparatively well," said Stretch.
Canadian government bond prices were higher across the maturity curve, with the two-year rising 2 Canadian cents to yield 1.135 percent and the benchmark 10-year adding 18 Canadian cents to yield 2.179 percent.
Comments
Comments are closed for this article.