Bank of Canada update on financial markets to 14 September

Canada's payments, clearing and settlement systems have functioned well this week. The Bank of Canada continues to provide liquidity as needed. Trading activity in Canadian bond and money markets has increased since Wednesday and bid-ask spreads have narrowed, while activity in the foreign exchange markets has been very subdued. The Canadian equity and derivatives markets re-opened on Thursday morning, with moderate volumes and orderly price movements. The Bank held a $7.0 billion Government of Canada treasury bill auction on Thursday as scheduled. The auction was well received by market participants. As previously announced, the auction of Real Return bonds was postponed until Wednesday 19 September.

As announced this morning, the Bank of Canada and the U.S. Federal Reserve have agreed to a temporary augmentation of their existing swap facility in order to facilitate the functioning of financial markets and provide liquidity in U.S. dollars, if needed, to Canadian banks to facilitate the settlement of their U.S. dollar transactions.