CANADA FX DEBT-C$ lower; Bank of Canada easing spurs some gains

Tue Jan 20, 2009 11:45am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* C$ jumps after Canadian rate cut, but down from Monday

* BoC cuts rates 50 bps to 1.0 percent, as expected

* Government bonds follow U.S. Treasuries lower (Adds details, quote)

By Jennifer Kwan

TORONTO, Jan 20 (Reuters) - The Canadian dollar fell versus the U.S. currency on Tuesday morning as the greenback rallied against a range of currencies, but recovered some losses after the Bank of Canada cut its key overnight lending rate to a 50-year low.

The U.S. dollar hit its strongest level against a currency basket since early December, with some traders crediting euphoria ahead of Barack Obama's inauguration as U.S. president for increasing short-term demand for the U.S. currency.

At 11:04 a.m. (1604 GMT), the Canadian currency was at C$1.2608 to the U.S. dollar, or 79.31 U.S. cents.

This was up from C$1.2675, or 78.90 U.S. cents shortly before the rate announcement, but still down from C$1.2547 to the U.S. dollar, or 79.70 U.S. cents, on Monday.

The currency may have firmed after the rate decision because a few market players were betting on a larger cut by the central bank, said Michael Gregory, senior economist BMO Capital Markets.   Continued...