The Canadian currency, which even flirted with parity towards its U.S. counterpart, declined once again today reaching the lowest levels since the beginning of the month, as stocks and commodities impacted the loonie’s attractiveness in a negative way.
The loonie is being a victim of its national central bank policies since it stated that a strong currency could stop plans of an economic recovery in the country, influencing traders’ perception towards the Canadian currency as the Bank of Canada may intervene in its currency performance, automatically creating a negative sentiment, which gained force today as such declarations were repeated. A part from BOC comments regarding a strong loonie, financial markets did not provide support for Canada’s currency to grow, considering the nation’s exporter profile that lost attractiveness as stocks and commodities, specially the crude oil, underperformed today.
According to analysts, two factors, which are not related, pushed the Canadian dollar away from parity with its U.S. counterpart, as the greenback gained since its rates could be undervalued, and the sentiment towards the loonie is becoming progressively pessimist, as investors are option for other high-yielding options in countries where a strong currency is being tolerated, like Australia, leaving the loonie in a second plan for most of traders.
USD/CAD traded at 1.0685 as of 21:04 GMT from a previous rate of 1.0518 yesterday. CAD/JPY traded at 86.20 falling from 87.55 yesterday.
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