Tuesday, 27 October 2015 02:06
TORONTO/OTTAWA: The Canadian dollar was little changed against the greenback on Monday ahead of US and Japan central bank decisions on interest rates, after last week’s volatility left the currency at a three-week low.
The US Federal Reserve is expected to leave rates unchanged this week, but investors will look for any hints as to whether the central bank is still on track to tighten credit by the end of the year.
The Bank of Japan will meet for a rate review on Friday. While it is set to cut its price forecasts, many officials prefer to hold off expanding its stimulus program. The Canadian dollar rallied through the first half of October as investors expected the Fed to hold off on a rate hike.
But the currency has given up ground in recent sessions and that the rally is likely done for the time being, said Scott Smith, senior market analyst at Cambridge Global Payments in Toronto.
“I think really we’ve seen a little bit of exhaustion, price action has been quiet to start the week,” said Smith.
“The overall larger trend for the Canadian dollar is that we’re likely to go lower,” he said. The Canadian dollar ended the North American trading session at C$ 1.3163 to the greenback, or 75.97 US cents, modestly stronger than Friday’s close of C$ 1.3175, or 75.90 US cents.
The currency hit a three-week low on Friday after weak domestic inflation data.
A gain in oil prices had helped bolster the loonie earlier in the session, but US crude reversed direction to settle down 62 cents at $ 43.98 a barrel on worries that oversupply in oil products would swell.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 3 Canadian cents to yield 0.520 percent and the benchmark 10-year rising 58 Canadian cents to yield 1.443 percent.
The Canada-US two-year bond spread was -12.1 basis points, while the 10-year spread was -61.5 basis points.
