Canadian Dollar Falls on Potential Disagreement About EU Bailout Fund

The Canadian dollar dropped today as the speculation that the rescue fund of the European Union won’t be boosted, making traders unwilling to buy currencies with higher potential yield, but also with higher risk.

The speculation that the European leaders may expand the European Financial Stability Facility initially gave boost to commodities and growth-related currencies. But very soon talks emerged that the politicians wouldn’t agree on that matter, as it often happens. For now the Forex market is mainly driven by the news from Europe, therefore it tends to react quickly on any data or even speculation about the EU and its crisis.

Crude oil, the chief Canada’s export commodity, also felt the shifting sentiment falling 2.6 percent to $86.05 per barrel in New York after rising 1.3 percent. The MSCI World Index went down 0.2 percent, following the yesterday’s advance, while the Standard & Poor’s 500 Index dropped 1.3 percent. The data from the US was good, but it wasn’t been able to help the loonie this time.

USD/CAD traded at 1.0189 today as of 1:00 GMT after rising yesterday from 1.0141 to 1.0186. EUR/CAD was at about 1.4023, following the advance on the previous trading session from 1.3944 to 1.4024. CAD/JPY traded near 75.35 after it went lower from 75.69 to 75.08 yesterday.

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