Canadian Dollar Experiences Further Decline

Analysts expect that the benchmark interest rate of Canada will be kept at 1% after tomorrow’s meeting and as a result, the major currency of the country, the Canadian Dollar, also known as Loonie, is actually trading at levels which are the lowest in this year, when compared to its US counterpart, the greenback. Not only against USD, but Loonie actually declined against most of its trading peers. Incidentally, a report also came out stating that the retail sales less automobile companies in the country have gone down in November.

Aaron Fennell stated that it will not be possible for Loonie to get back to the normal interest rates in near future. He added that even if the rates are raised in the country, it should be done slowly, by not more than 25 basis points at one time. He also commented that the financial regulators will probably do rate raise only twice and then wait to see what the proceedings are.

The Loonie is currently priced at 99.39 cents per USD, after declining by 0.1%. On 18th January, it reached its lowest level in New Year, that of 99.47 cents per USD. Against Yen, the current decreased by 1.3% and is currently priced at 89.07 Yen.

The Options Traders are being more bearish these days on the Loonie. The 25-delta risk reversal rate of last 3 months traded highly at 0.92 percentage point, marking its biggest value since 27th November. Incidentally, the 25-delta risk reversal rate denotes the premium charged for buying rights of USD against the Loonie versus the contracts to sell. Incidentally, it averaged at 1.5 percentage points in last 12 months.

The Futures of the biggest export of Canada, Crude Oil increased by 0.4% to $95.92 per barrel. The benchmark 10-year bonds of Canada jumped up, thereby resulting the yield to slide down by 1 basis point. On the other hand, the 2.75 percent note which is scheduled to mature in June, 2022 increased by 13 cents and is at C$107.10 currently.

The retail sales of the country, sans autos went down by 0.3% whereas the gain was projected to be of 0.1%. The overall retail sales of Canada increased by 0.2% in November, however, the gain in the month of October, was revised down to 0.5%. Many analysts feel that the retail sales volume is confusing for the investors.

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