Loonie Falls vs. Greenback, Strengthens vs. Euro & Yen

The Canadian dollar fell against its U.S. counterpart today on the renewed concerns about the European debt crisis, but sustained its gains versus the euro and the Japanese yen after China signaled that it might end the yuan’s peg to the U.S. dollar, bolstering the confidence in the growth-linked currencies.
On the positive side today we have, together with the news from China, rising commodity prices. Crude oil traded near $77.54 per barrel after reaching $78.92, the highest level in six weeks. Crude oil is the main export of Canada. Some other commodities, including gold, also went up as the strong yuan promises increasing imports in China, because the strong currency will make imported goods cheaper for the consumers. The strong China’s currency also should improve the global economy, bolstering the loonie as it’s strongly correlated with the economic growth.
On the negative side we have the long-term credit rating of BNP Paribas, decreased by Fitch Ratings from AA to AA-. The traders these days tend to react more strongly on the bad news than on the good ones, especially the ones coming from Europe, so the Canadian currency felt the negative impact of the bad news from Europe.
USD/CAD traded near 1.0232 as of 23:23 GMT today after opening at 1.0195. EUR/CAD fell to 1.2606 from the opening price of 1.2668. CAD/JPY rose to about 88.91.

If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.