Although the ‘Loonie’ hit a 7-week high against the ‘Greenback’ yesterday as risk-appetite dominated the market and Canada’s New Home Price Index showed a slight improvement, the currency has fallen for the first time this week due to developments in the Eurozone.
The Canadian Dollar Exchange Rate was in the region of 0.9869 against the US Dollar as of 14:11 pm GMT
Today EU finance ministers have gathered in Dublin for a two-day meeting at which issues including the Eurozone’s banking reforms, the Cypriot bailout and Slovenia’s current problems, will be discussed.
Now, with reports beginning to circulate that attempts to bolster Europe’s flagging financial system are in trouble, risk-sentiment is waning and the currencies of commodity-driven nations, like Canada, are dropping.
The Canadian Dollar dropped to 98.79 US Cents after Cyprus was forced to deny needing further financial aid while a German newspaper asserted that direct bank recapitalisation from the European bailout fund was getting nowhere.
The currency was also adversely affected by declining oil prices and the news that retail sales in the US, its largest trading partner, fell by the most significant amount for nine months in March. US retail sales decreased by 0.4 per cent despite economist’s expectations for stagnation.
After last week’s disappointing Canadian employment figures the Canadian Dollar posted widespread declines. Since then the currency has been able to rebound slightly, but further ‘Loonie’ losses could be on the way.
One foreign-exchange expert, who works for Scotia Capital Inc, stated: ‘I wouldn’t be surprised if we see the Canadian dollar weaken off at a very gradual pace today. It’s just a risk- off scenario because of continuing problems in Europe that’s caused the Canadian dollar to sell off’.
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