The Canadian dollar climbed against the euro today as declining manufacturing of the eurozone weakened the shared 17-nation currency. Canada’s currency erased losses versus the US dollar and was flat against the Japanese yen.
It is not surprising that the Canadian currency gained against the euro, considering the shrinking eurozone manufacturing and the unexpected growth of German unemployment. Yet it is surprising to see the growth-related loonie to hold ground versus the safe currencies of the United States and Japan, considering the negative sentiment of Forex traders. The slower-than-expected growth of US employment worsened already sour mood of investors, but somehow the Canadian dollar was able to withstand the impact of the bad news.
Bank of Canada Governor Mark Carney was speaking yesterday about a possible interest rate hike. It is unusual nowadays to hear from a leader of a central bank such hawkish statement and many economists question appropriateness of such attitude. The global economy demonstrates downturn and it is unlikely that Canada’s economy would emerge unaffected. Anyway, tomorrow’s monetary policy meeting of the European Central Bank and Friday’s US non-farm payrolls should have a stronger effect in the near term than speculations about the BoC stance.
EUR/CAD fell from 1.3046 to 1.2972 as of 23:46 GMT today, touching 1.2953 intraday — the lowest rate since April 18. USD/CAD was at about 0.9866 after it climbed from 0.9856 to 0.9902. CAD/JPY was flat near 81.21.
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