European Problems Have Negative Impact on Canada’s Currency

The Canadian dollar weakened today as the sovereign-debt crisis in Europe saps demand for riskier assets and drive commodity prices down, making the Canadian currency less attractive to Forex trading. The currency advanced against the euro.

Crude oil, key export of Canada, fell as much as 2.3 percent to $85.92 per barrel in New York. December futures for copper delivery slid 3.8 percent to $3.7825 per pound on COMEX. The Standard & Poor’s 500 Index dropped 1 percent, while Canada’s benchmark S&P/TSX Composite Index went down 0.8 percent.

Earlier market analysts speculated that the loonie behave like a safe refuge from the European crisis. As it turned out, the Canadian currency is still considered “commodity currency” and suffers from problems in Europe and other parts of the world. Yet Canada’s dollar outperformed the shared European currency.

USD/CAD rose from 0.9904 to 0.993 as of 5:38 GMT today. EUR/CAD fell from 1.3556 to 1.3526, following the drop to 1.3500. CAD/JPY slipped from 77.26 to 77.00.

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