Loonie Declines vs. Greenback, Remains Strong vs. Majors

The Canadian dollar weakened versus its US counterpart as the problems in Europe and prospects of slower economic growth in China made the US currency more preferable to the Canadian one.

Italy is now yet another country that may require help from its European peers, while Greece still undermines confidence in the future of the Eurozone. In such an unfavorable environment growth-related currencies usually retreat, making safe currencies, like the US dollar and the yen, more attractive. Yet the loonie is holding relatively well and posted gains against 10 of 16 major currencies.

Tom Levinson, a foreign-exchange strategist at ING Bank NV, made comment about the loonie’s performance:

With Canada, they’re kind of brushing off this labor report in the US, whereas everywhere else seems to have reacted pretty negatively to it. We still take the view that US data will steadily improve throughout the rest of this year and that will contribute to better prospects for Canada as well.

Some analysts believe that the robust jobs market and growing inflation in Canada will prompt the nation’s central bank to raise its interest rates sooner than was previously expected.

USD/CAD traded near 0.9721 today as of 3:01 GMT after rising yesterday from 0.9612 to 0.9685. CAD/JPY dropped from 83.68 to 82.41 on the previous trading session before trading at about 82.42 today. Meanwhile, EUR/CAD traded at fell from 1.3589 to 1.3554 and reached the low of 1.3524, the lowest intraday price since March 14.

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