Global Economic Environment is Bad for Canadian Dollar

The Canadian dollar slumped today against the US dollar on the concerns that the European sovereign-debt crisis may worsen and as the stocks and crude oil declined. The euro was hurt by the concerns about the sovereign debt more than the Canadian currency, therefore the loonie rose against the shared 16-nation European currency.
The Standard & Poor’s 500 Index went down 0.8 percent and the MSCI World Index of stocks dropped 1 percent. October delivery for crude oil fell as much as 2.6 percent to $72.63 per barrel in New York. The loonie also weakened after the Wall Street Journal claimed that the stress tests of the European banks underestimated some holdings of the government debt.
Shaun Osborne, chief currency strategist at 
Toronto-Dominion Bank’s TD Securities unit, stressed that the Canadian currency depends more on the global events than the Canadian specifics:

The driver is the U.S. dollar’s generally stronger tone rather than anything Canadian-dollar-specific. While the Canadian dollar will remain a slave to the broader ebb and flow of market sentiment in the near-term, the looming Bank of Canada policy announcement will draw market investors back to more Canadian-dollar-specific issues to some degree today.

The policy makers of the Bank of Canada will meet tomorrow to discuss and make the decision about the interest rates.
USD/CAD surged from 1.0350 to 1.0477 today as of 20:47 GMT, while EUR/CAD fell from 1.3326 to 1.3283, following the decline to 1.3247.

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