Canadian Dollar Drops on Oil, Stocks Performance

The Canadian dollar dropped from the highest level in 2009 versus the euro as stocks did not manage to extend the advance reached in the beginning of the week, forcing the currency down also versus its U.S. counterpart.
After touching the highest level versus its U.S. counterpart in two months, the loonie started to decline yesterday and extended its losses today as the crude oil’s volatility affected the Canadian currency performance in a day of weak performance in equities markets. The loonie has a strong relation with stocks, and today’s decline as well as a less strong demand for commodities played a major role in Canada’s dollar downtrend today, specially versus its U.S. counterpart as an economic activity report came beyond expectations and increased even further confidence towards the U.S. economic recovery in 2010.
The oil volatility is providing traders with high swings on the loonie’s charts, opening good day-trade possibilities, according to analysts. Despite today’s decline, the Canadian dollar outlook for 2010 remains above average as demand for commodities shall increase as the global economy recovers, consequently making the loonie to benefit from such scenario.
USD/CAD declined to 1.0525 as of 17:02 GMT from a previous rate of 1.0398 in the intraday. AUD/CAD touched 0.9416 from 0.9325.

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