The Canadian dollar dipped 0.4 percent against the US dollar on Wednesday on worries over slackening demand for Canadian commodities, but it closed well off its lows for the day as North American stock markets rebounded and commodity prices made gains.
Canadian bond prices rallied along with the larger US market on weaker-than-expected US data, which increased the allure of safe-haven government debt. The Canadian dollar ended the North American session at C$1.2302 to the US dollar, or 81.29 US cents, down from C$1.2250 to the US dollar, or 81.63 US cents, at Tuesday's close.
At the beginning of the session, the currency weakened to C$1.2415 to the US dollar or 80.54 US cents, as US equity futures plunged on gloomy outlooks from several companies. With global growth slowing, concern is growing that demand for the commodities Canada exports will drop off.
In times of market volatility, such concerns are often reflected in the value of the Canadian dollar. Stock prices started to rise during the session, as did prices for oil and some other key commodities, and the Canadian dollar followed suit. The US market is closed on Thursday for Thanksgiving Day, which could lead to more volatile moves by the Canadian dollar due to tighter liquidity.