The commodity-driven Canadian Dollar was able to advance by 0.4 per cent against its US counterpart after news broke that Cyprus had clinched a bailout deal in the eleventh hour.
The Canadian Dollar Exchange Rate was in the region of 0.9814 against the US Dollar as of 12:53 pm GMT
The ‘Loonie’ advanced against several of its most traded peers as Cyprus submitted to the proposal of EU Finance Ministers, agreeing to wind down the nation’s second largest bank – Cyprus Popular Bank.
Cyprus also agreed to tax uninsured deposits held by the Bank of Cyprus. Deposits worth less than the insured limit of 100,000 will be spared under the new bailout deal.
European Union Economic and Monetary Affairs Commissioner Olli Rehn said this of the decision: ‘It’s been yet another hard day’s night. There were no optimal solutions available, only hard choices.’
Meanwhile, Dutch Finance Minister Jeroen Dijsselbloem asserted: ‘This solution we reached tonight doesn’t have the downsides that the solution of last week did.’
Although the Euro fluctuated in the hours immediately following the announcement, other higher-risk currencies, including the Canadian Dollar, gained from the development as risk aversion lessened.
As foreign-exchange strategist Jeremy Stretch stated: ‘We’ve had a little bit of a relief rally on the fact that we’re not going to get a major implosion on Cyprus today. After nine-consecutive weeks of shorts being extended I think there’s potential opportunity, if we do see some slightly firmer numbers, particularly in terms of the GDP data on Thursday, for perhaps a little bit of a Canadian Dollar recovery.’
While additional news from the Eurozone could trigger ‘Loonie’ movement investors will also be looking ahead to Wednesday’s volatile Canadian CPI figures.
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