The Canadian dollar is retreating in forex trading, falling against major counterparts including the US dollar. Loonie is also struggling against other commodity currencies, dropping as it is used to fund purchases of the New Zealand dollar and Australian dollar.
Right now, there are concerns that a slowing US economy will reduce the demand for Canadian exports. Canada relies heavily on the US economy to help support its own. The US purchases a great deal of oil from Canada, and falling oil prices, a long with a decreased demand, are taking their toll.
Additionally, many forex traders like to use the loonie in purchases of the NZD and AUD. This is, in large part, because, amongst commodity currencies, CAD is low beta. As a result, it can be sold to fund purchases of higher beta commodity currencies like the New Zealand dollar and the Australian dollar.
For now, it looks as though loonie could see a significant drop in forex trading. It is already struggling against the US dollar, and there are some economic issues facing Canada in terms of employment and housing. It will be interesting to see where the Canadian dollar goes next.
At 13:11 GMT USD/CAD is higher, 1.0471, up from 1.0403 at the open. AUD/CAD is at 0.9965 and NZD/CAD is at 0.7941. The UK pound is one of the few currencies losing ground to CAD, with GBP/CAD at 1.6028, down from 1.6082.
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