CANADA FX-C$ tilts lower on soft GDP data, bonds flat

Wed Jun 30, 2010 5:08pm EDT
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* C$ ends at 93.93 U.S. cents, near intraday low

* Bonds little changed

* Risk pulled ahead of Friday's U.S. employment report

* Canadian financial markets shut Thursday for Canada Day

By Ka Yan Ng

TORONTO, June 30 (Reuters) - The Canadian dollar slumped to to a three-week low against the U.S. dollar on Wednesday as expectations of higher interest rates were pared back further after data showed the Canadian economy stalled unexpectedly in April.

Government data showed real gross domestic product in Canada was flat in April after seven straight months of expansion, disappointing market expectations for 0.2 percent growth and casting doubt on the pace of interest rate hikes by the Bank of Canada. [ID:nN30434455]

Currencies usually strengthen as interest rates rise as higher rates attract capital flows.

Expectations for a Bank of Canada rate rise in July, as measured by yields on overnight index swaps, dropped to around 50 percent on Wednesday from around 80 percent just last week. BOCWATCH   Continued...