Yesterday, as the session drew to a close, the loonie showed some fight, gaining as positive economic data gave Forex traders a taste for risk. That has mostly faded by now as the fiscal cliff continues to loom in the United States.
Right now, better economic data is being overshadowed by the fiscal cliff. House Speaker John Boehner failed to deliver his “Plan B,” and negotiations over how to fix the fiscal cliff have stalled. The result is uncertainty, and high beta currencies like the Canadian dollar are pulling back as a result.
It’s not helping the loonie right now that oil prices are down as well. Yesterday, oil prices topped $90 a barrel, and that helped support the Canadian dollar in late trading. Now, though, oil prices are falling back. Canada relies on oil as a major export, and so the price of oil influences the loonie’s performance.
For now, Forex traders are waiting for a little more direction on the fiscal cliff before Congress adjourns for the Christmas holiday recess.
At 13:38 GMT USD/CAD is higher at 0.9926, up from the open at 0.9877. GBP/CAD is also higher, gaining to 1.6109 from the open at 1.6079. EUR/CAD is moving higher as well, gaining to 1.3108, up from the open at 1.3061.
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