CAD Gains on Traders’ Euphoria After Summit

The Canadian dollar jumped against the US dollar and the Japanese yen, demonstrating the biggest advance this year, as risk appetite ruled the Forex market after the conclusion of the two-day EU summit. The currency closed weaker against the euro, but the losses were limited.
The meeting of European Union leaders has ended and the result was unexpectedly good. The European chiefs showed willingness to fight the crisis and to take actions. The problems of the eurozone are far from resolved, but a bit of good news after the constant stream of negativity was well-received by FX traders. The resulting risk appetite lifted riskier currencies.
The Canadian dollar gained, and not only because of the good developments in Europe, but on good domestic fundamentals as well. Canada’s gross domestic product expanded 0.3 percent in April. That was more than expected (0.2 percent) and above the March rate of growth (0.1 percent). Signs of accelerating economic growth spurred speculations that Canada’s central bank may boost its interest rates.
USD/CAD slumped from 1.0331 to 1.0164 and CAD/JPY jumped from 76.87 to 78.46. EUR/CAD closed at 1.2872 up from 1.2851, but far below the daily high of 1.2974.

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