Risk aversion is the Forex market driver today, thanks to the Fitch downgrade of Japan. Even though equities aren’t being much affected by the latest news, currencies are. High beta currencies like the Canadian dollar are dropping, thanks to a desire for safe haven. Loonie is headed lower against the US dollar today, even though its own credit rating is remains solid.
Canada retains the highest credit rating with all the agencies, but that isn’t helping the Canadian dollar today on the Forex market. The Japan downgrade has shaken things up a bit, and the US dollar is gaining against the loonie today. However, even though the Canadian dollar is down against the greenback, it is up against other high beta currencies, including the UK pound.
With the situation in Europe so uncertain, it isn’t much of a surprise that European currencies have been hit harder in the wake of the Japanese credit downgrade. Canada’s currency remains stronger against some of the alternatives, especially in Europe. Additionally, Canadian dollar is up against the yen, which continues to struggle as Forex traders question the economic recovery in Japan.
At 12:38 GMT USD/CAD is up to 1.0176 from the open at 1.0177. GBP/CAD is lower at 1.6047, down from the open at 1.6104. EUR/CAD is down to 1.2971 from the open at 1.3038. CAD/JPY is up to 78.48 from the open at 77.99.
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