By Commodity News Service Canada
WINNIPEG, August 27 – The Canadian dollar was sharply higher relative to the US dollar on Wednesday, gaining more than three-quarters of a cent against its US counterpart.
Much of the strength came from the news of a major deal that will see US company Burger King buy Canadian chain Tim Hortons, as it will increase demand for Canadian currency, analysts said.
The Canadian dollar closed at US$0.9212 or US$1=C$1.0855 on Wednesday, which compares with Tuesday’s North American settlement of US$0.9131 or US$1=C$1.0952.
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Expectations of a positive Canadian gross domestic product report on Friday were also bullish. Traders believe Statistics Canada will show GDP grew by 0.2 per cent in June, which would equal an annualized growth rate of 2.6 per cent.
Speculative based buying was also helping to lift the Canadian dollar, though weakness in crude oil and gold prices limited the upside.
Canadian bonds ended higher on Wednesday, reacting to expectations that the European Central Bank will start to add further monetary stimulus into the economy, traders said. Strength in other global bond markets and the Canadian dollar’s rally were also supportive.
The two-year bond yielded 1.102% late Wednesday, from 1.105% late Tuesday. The 10-year bond yielded 2.007%, from 2.044%. Bond yields fall as their prices rise.
