Canadian Dollar Falls on Lower Oil Prices

The Canadian dollar weakened as the disaster in Japan cut prices for crude oil and other raw materials and damped demand for currencies linked to economic growth, including the loonie.

The earthquake, tsunami and the threat of radiation leak from the damaged nuclear plant in Japan hurt risk sentiment and commodities. This is bad for Canada and its currency as raw materials provide about half of the nation’s export revenue. The Thomson Reuters/Jefferies CRB Index of raw materials fell 3.6 percent, the biggest decline since November 12, dropping for the sixth day in the longest losing streak since August.

The situation in Middle East may still influence the loonie, damping demand for growth-related currencies. On the other hand, the threat to supplies of oil can boost price for crude and spur the Canadian currency.

USD/CAD traded at 0.9841 as of 2:28 GMT today after it jumped yesterday from 0.9735 to 0.9854. EUR/CAD traded at about 1.3757 following the advance on the previous trading session from 1.3619 to 1.3789.

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