By Commodity News Service Canada
Winnipeg, July 29 – The Canadian dollar was sharply lower Tuesday with the markets turning cautious at the end of the session as the United States and European Union adopted tougher sanctions on Russia over their continued support of the Ukrainian rebels, analysts say. The rebels were blamed for downing a Malaysian airliner by a ground-to-air missile earlier this month.
At 3:42 CDT Tuesday afternoon, the loonie declined 0.5 of a cent to US$0.9200 or US$1 = C$1.0851.
The new measures specifically target sectors of the Russian economy, including energy, weapons and finance. Russian state-owned banks have also been banned from selling bonds or equities with a maturity of over 90 days in European capital markets, traders say.
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The U.S. dollar had initially strengthened mid-Tuesday morning on the back of a strong reading on consumer confidence. The U.S. Conference Board reported its Consumer Confidence Index jumped to 90.9 in July to 85.2 in June. This was the highest level since October 2007.
Other data showed that U.S. home prices rose in May from a year earlier at the weakest pace in 15 months. The Standard & Poor’s/Case-Shiller 20-city home price index increased 9.3 per cent in May, down from 10.8 per cent the previous month.
Canadian bonds ended higher on Tuesday, benefiting as other bond markets did from safe-haven flows triggered by renewed concern over the situation in Ukraine and its implications for geopolitical stability.
Canada’s two-year bond yield is at 1.081 per cent on Tuesday, from 1.087 per cent late Monday. The 10-year bond yielded at 2.089 per cent from 2.118 per cent.
