Fears of US Fiscal Cliff Have Negative Impact on Canadian Dollar

The Canadian dollar weakened today as concerns about the US fiscal cliff were widespread ahead of negations between President Barack Obama and congressional leaders. The currency erased its gains versus the euro and the Japanese yen.
Democrats Senate Majority Leader Harry Reid complained that “we have nobody to work with, to compromise” and “I don’t know time-wise how it can happen now”. Such comments do not bode well. In fact, some experts believe that President Obama will allow the economy to reach the cliff, yet will be able to avert recession.
Whatever the future holds, traders are not very optimistic right now. The Standard & Poor’s 500 Index of stocks declined 0.4 percent. Crude oil, Canada’s major export, was flat after dropping 0.6 percent to $90.32 per barrel in New York.
USD/CAD rose from 0.9949 to 0.9962 as of 21:25 GMT today, reaching the highest settlement since November 22. EUR/CAD was near the opening level of 1.3169 after dropping to 1.3096. CAD/JPY climbed from 84.46 to 87.05 — the highest intraday price since April 20, 2011, but retreated to 86.35 later.

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