The Canadian dollar advanced today against the euro as the political turmoil in Greece made traders flee from the shared European currency. The loonie also rose a little versus the Japanese yen, but fell against the US dollar.
The current situation in Greece is a mixed blessing for the Canadian currency. Forex traders seek stable and safe currencies as they run from the euro and associated risks. The Canadian dollar is a good choice as it is supported by good fundamentals in Canada and the United States, the biggest trading partner of Canada.
On the negative side, the loonie (as Canada’s currency is nicknamed because of the image of an aquatic bird on a C$1 coin) is tied to economic growth and the problems of Europe have a negative impact on growth prospects. The European debt crisis has shaken the entire world and Canada is not immune. Prices for commodities are falling and Canada’s currency depends on performance of raw materials. In the end, the future of the loonie is uncertain as the outcome of Europe’s story and its influence on global markets is unclear.
USD/CAD was up from 1.0036 to 1.0066 as of 22:41 GMT today, while the intraday high of 1.0072 was the highest since January 25. EUR/CAD fell from 1.2867 to 1.2816, touching 1.2781 intraday — the lowest level since January 12, 2011. CAD/JPY was up from 79.51 to 80.09 before retreating to 79.67.
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