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Forex: Loonie Bears Press Currency To Finish Lower

Friday, 15 July 2005 16:13:32 GMT  |  DailyFX Research Team, strategist@fxcm.com

The loonie continued its two day skid to finish lower on the week’s trading. The world’s eighth largest economy’s currency tumbled over 130 pips off its high to close near its daily low. The Canadian dollar traded at C$1.2204 against the U.S. dollar as of 19:05 GMT.

Weaker than expected motor vehicle sales data gave greenback bulls reason to push the currency lower on the day. However, the pair seemed to ignore mixed U.S. economic data as it continued its climb throughout morning trading. Canadian motor vehicles came in worse than expected, contracting 6.9 percent versus expectations of a 6 percent decline. At this point any data showing weaker economic growth will likely give the Bank of Canada reason to pause in future rate hike considerations. As a result, a relatively insignificant fall in any given indicator could shake investor confidence and weaken bullishness on the loonie. Investors will watch next week’s Consumer Price Index release closely, as it could additionally have direct impacts on the BoC’s currently hawkish stance.

Canadian equities markets edged higher on the day as energy stocks stabilized on slightly higher oil prices. The TSX Composite added on 0.1 percent to 10,135.88. Gainers included Imperial Oil Ltd, gaining C$1.22 to C$103.07 on the day. Telecom stocks were likewise strong as Telus Corp ran up C$0.94 to C$43.49. In earnings news, CHUM Ltd., the radio and TV powerhouse, jumped C$0.50 to C$30.50 after third-quarter profit rose 64 percent to C$23.4 million and revenue added 18 percent.

Canadian 10 year bonds remained little changed on the day, with premiums 0.066 points higher to 108.060. Yields dropped to 3.915 percent.

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