Germany’s Ban Caused Traders to Panic, Loonie Down

The Canadian dollar weakened today against some other most traded currencies, including the U.S. dollar, the euro and the Japanese yen, after the decision of the Germany’s leaders to prohibit naked short selling caused the risk sentiment to deteriorate and the investors to shun the riskier assets.
In short sales the speculators borrow the assets, betting on the futures decline of the prices, while in naked short sales the borrowing of the actual assets doesn’t occur, allowing unlimited bets. The Germany’s leader considered the last practice is hurting the economy and banned it in hopes to improve the economical conditions. For the present time this decision showed exactly reverse results, bringing the uncertainty and the volatility on the markets and causing the traders to panic.
Such environment tends to draw the investors’ sentiment towards the risk aversion, weakening the currencies tied to the growth. The prospect for the increasing interest rates waned as the turbulence on the markets grew. The analysts say that the Canadian currency may fall to 1.0700 — 1.0750 per the U.S. dollar.
USD/CAD traded at 1.0427 as of 20:46 GMT today after it opened at 1.0389. EUR/CAD traded at about 1.2945 after opening at 1.2679. CAD/JPY traded near 87.96 down from the opening rate of 88.73.

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