The Canadian dollar climbed against the US dollar and the Japanese yen after European Central Bank President Mario Draghi promised that the central bank will support the euro. As one could expect, the euro outperformed the Canadian currency after that promise.
Draghi said that “the ECB is ready to do whatever it takes” to keep the shared European currency in place. He also addressed the issue of rising borrowing costs:
To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate.
Stocks and commodities reacted favorably to Draghi’s comments. September futures for delivery of crude oil gained as much as 1.7 percent to $90.47 per barrel on NYMEX today. The Standard & Poorâs 500 Index also advanced 1.7 percent. The Canadian dollar is considered to be tied to economic growth, therefore it is correlated to stock and commodity markets.
USD/CAD dropped from 1.0153 to 1.0099 and CAD/JPY advanced from 76.93 to 77.44 as of 23:14 GMT today. Meanwhile, EUR/CAD rose from 1.2334 to 1.2400.
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