The Canadian dollar failed to maintain its rally versus the US dollar and shed yesterday’s gains as fear returned to the Forex market. At the same time, the loonie jumped against the euro and drifted sideways versus the Japanese yen.
Most currencies lost their gains after yesterday’s rally as quick as they have gotten them. Yes, it looks like one problem of the United States was resolved, but there remain many more to deal with and that makes investors unwilling to risk. Then, there is Europe with its share of problems, which were somewhat forgotten for now, but that does not mean that they have gone away.
Another major negative factor for riskier currencies was the minutes of last Federal Reserve’s policy meeting, which promised quantitative easing to end as soon as the end of this year or even sooner. This statement was radically different from the previous ones, which were promising that asset purchases would be extended to 2014 or even 2015.
USD/CAD climbed from 0.9847 to 0.9882 as of 23:56 GMT today. At the same time, EUR/CAD dropped from 1.2984 to 1.2871. CAD/JPY opened at 88.63, fell to 87.95, but later rebounded to 88.71 — the strongest settlement since April 6, 2011.
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