Canadian Dollar Drops as Germany Disappoints Traders

The Canadian dollar went down today, following the week of big gains, after Germany’s politician shattered confidence in ability of the European leaders to end Europe’s woes, saying that there are no an easy solution to the region’s economic problems.
The Canadian currency (often nicknamed the loonie) was rallying last week on the speculation the economy of Canada’s neighbor and major trading partner — the US — isn’t as bad as was previously thought. The optimism about the future of the European Union, caused by the Group of Twenty meeting and the promise of Europe’s chiefs to present a plan for dealing with the debt crisis, also bolstered the loonie, as well as other currencies with high yield.
This week Germany stepped in, claiming there is no plan that can magically cause all Europe’s problems disappear. The reaction of the Forex market was rather predictable: traders, that previously were eager to risk, changed their mind and ran to safer assets. The positive outlook for the US economy may support the loonie, but there are signs that America’s economy is also in danger.
USD/CAD went higher to 1.0166 from the opening price of 1.0108 today as of 21:07 GMT, while earlier it was down to the daily low of 1.0042. EUR/CAD went lower from 1.4017 to 1.3984, while CAD/JPY dropped from 76.17 to 75.51.

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