Loonie Declined with Increasing Demand for Safety

The Canadian dollar dropped today against its U.S. counterpart to the lowest level in more than a month as the commodities and the global equities were affected by the concern about the European debt crisis.
The doubts that the aid from the European Union will improve the situation in Greece and in the Euro zone in general drove the sentiment toward the risk aversion. Such pessimistic mood in turn influenced the commodity prices and the stocks, which fell and, as a result, caused decline of the currencies related to the economic growth.
The desire for the safety helped the greenback to go up. Yet the analysts say that the fundamentals are favorable for the Loonie and the currency may still reach parity with the U.S. dollar. The Canadian dollar last time traded at parity with the greenback in April 27th.
USD/CAD reached 1.0246 today as of 20:52 GMT after opening at 1.0107. CAD/JPY dropped to about 92.22 down from the opening rate of 93.50. GBP/CAD traded near 1.5518.

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