INSIDE CANADA: CAD Touches Weakest Level Since 2009; Bonds Gain

CAD ends day down 0.2% vs USD to 1.1171 after Federal Reserve reduced stimulus by $10b a month, matching forecast; CAD fell as much as 0.3% to 1.1187, weakest level since July 2009.

  • CAD rose earlier against most of 16 major peers as investors sought haven while interest-rate cuts by Turkey and South Africa failed to prop up emerging-market currencies
    • CAD briefly gained vs USD, appreciating as much as 0.5%
    • CAD +0.3% vs AUD to 0.9762, first increase in three days
  • CAD has fallen 1.8% since Bank of Canada in Jan. 22 policy report cited currency strength as a headwind to exports
  • CAD is biggest loser this month in basket of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Index, dropping 4.5%; AUD is second-worst performer, declining 1.2%
  • CAD 14-day relative-strength index versus USD is below 30, level that indicates it may be set to reverse losses, for 12th day, longest stretch since October 2008


  • Yield on 10-year government bond falls for second day, dropping six bps to 2.36%
  • 1.5% security due in June 2023 climbs 46 cents to 92.82
  • Bank of Canada auctioned C$3.3b ($3b) of 1% bonds maturing in May 2016, drawing average yield of 1.014%
  • Sale attracted C$8.69b in bids for a coverage ratio, a gauge of demand, of 2.63, lowest since September 2-yr note auction
  • Yield spread of provincial bonds over federal debt was unchanged at 68 bps yday, according to Bank of America Merrill Lynch Canadian Provincial & Municipal Index
  • Effective yield on provincial debt fell to 2.84% from 2.86%


  • Yield spread on corporate bonds over federal unchanged at 114 bps yday, according to Bank of America Merrill Lynch Canada Corporate Index
  • Effective yield on corporate debt rises to 2.85% from 2.87%

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