Concerns for Global Economic Growth Rise, Hurting Loonie

The Canadian dollar today sank against its U.S. counterpart and weakened versus the euro on the concerns about the state of Europe’s economy and its banking system, causing the investors shun the higher-yielding stocks and commodities.

The demand for the three-month loans, offered tomorrow by the European Central Bank, will show the state of the European banks, which are required need to repay as much as 442 billion euro on July 1st. The news from other parts of the world also aren’t particularly supportive for the growth-linked currencies. The consumer confidence in the U.S. showed the significant slump to 52.9 down from 62.7 in May. The speculation also suggests that the growth in China is slowing.

The traders are worried that the problems in the U.S. would affect Canada’s economy. The general opinion, though, is that Canada’s financial system is one of the strongest in the world and current move occurred only because of the temporal risk aversion sentiment.

USD/CAD jumped to 1.0536 as of 18:54 GMT after opening at 1.0356. EUR/CAD rose to about 1.2864 from the opening price of 1.2714.

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