The Canadian dollar continued its last week trajectory this Monday as markets that have strong correlation with its price operated on the red globally, forcing the loonie down versus virtually all of 16 main traded currencies in the beginning of this week.
Since risk aversion declined two weeks ago with a Chinese statement announcing lending restrictions in the country and followed by a White House speech concerning the same tendency in the U.S. last week, the Canadian dollar declined significantly and today aggravated its drop as commodities and stocks did not manage to rebound from last days’ retraction. The crude oil was very volatile today, trading near $75 a barrel in New York, and it has been having a great part of responsibility behind the loonie’s actual rates, since Canada is one of the main energy providers for the U.S., and the new financial regulations trend coming from China and the United States are impacting commodities market sentiment, as traders expect economic growth to accelerate at a slower pace since bank loans will not be granted so easily as they used to be.
Analysts stress on the correlation between commodities and the Canadian dollar rates, at the same time that they suggest that the loonie would be undervalued for the moment. The speculations of parity with the U.S. dollar have definitely disappeared for the moment, and now traders are analyzing how low can the loonie trade within the present conditions.
USD/CAD traded at 1.0592 from a previous rate of 1.0578 when markets opened yesterday. AUD/CAD traded at 0.9568 from an opening rate of 0.9556.
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