Canadian Dollar Moves Higher as Cautious Optimism Shows

Cautious optimism is helping the Canadian dollar right now as stocks recover from the last two days of big losses. Risk appetite is making a cautious appearance on good news out of the US.

The FOMC is meeting today, wrapping up a two-day conference. However, with the latest ADP news indicating that jobs were added to the US economy, it looks as though it will be a non-event — and QE3 has been put off again.

Loonie is gaining some support on these positive developments, and as focus moves off the eurozone for a little while. Oil prices are rising again, and that is also helping the Canadian dollar. Oil is a major export for Canada, and the progress of the loonie often tracks oil prices.

Today’s gains are helping the Canadian dollar off lows not seen for nearly two weeks. The last two days have been rough for all financial markets, and high beta currencies took the biggest hit. Right now, Forex traders and other investors are taking a breather, and looking for some of the positive news. It’s important to be watchful, though: Another bombshell from the eurozone could easily turn risk appetite into risk averson.

At 14:05 GMT, USD/CAD is lower, down to 1.0138 from the open at 1.0191. GBP/CAD is also lower, at 1.6212 from the open at 1.6252. EUR/CAD is actually a little higher, at 1.3977 from the open at 1.3968, but the euro appears to be losing ground.

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