Loonie Falls on Stocks, Oil & Concerns for European Debt Problems

The Canadian dollar declined today as the concerns about the sovereign debt in the European countries caused the investors’ sentiment to shift toward the risk aversion, damping the appeal of the commodities and the stocks and decreasing demand for the growth-related currencies.

The futures on crude oil, Canada’s key export, dropped as much as 3.3 percent to $82.10 per barrel, the lowest level this month. The MSCI World Index of equities in developed nations posted the decline for the seventh day, tumbling 2.1 percent in the longest losing streak of declines since January. The stocks also dropped on the speculation that the China would perform measures to trim its inflation.

The Canadian dollar was the second worst performer today after the Norwegian krone, which also depend on the oil prices. The analysts expect the loonie, as the Canadian currency often nicknamed, to decline to $1.30 level in the short term.

USD/CAD jumped from 1.0096 to 1.0217 as of 22:19 GMT today. EUR/CAD rose from 1.3717 to 1.3786, following the advance to 1.3875.

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