Loonie Pulls Back After Recent Gains

Canadian dollar is heading lower today following a few days of gains against most of its major counterparts. The loonie saw some solid gains on recent oil prices data, but now it appears that some Forex traders are taking profits and trying to position themselves for what might be next.

Loonie is heading lower today, following a bit of a surge yesterday. The narrowing oil price discount helped the Canadian dollar, since oil is Canada’s biggest export. However, the gains proved to be short-lived, as the loonie is down against its major peers today.
Some of that is due to profit taking, but there are also concerns about the situation from the standpoint that the Canadian dollar is likely to fall behind in the coming months, especially against the US dollar. While the Bank of Canada is likely to keep its rates relatively low, the Federal Reserve is likely to begin tapering its asset purchase program. The divergence in monetary policy and outcomes is likely to mean more weakness for the loonie, especially against the greenback.
At 14:22 GMT USD/CAD is higher, rising to 1.0623 from the open at 1.0593. There is some speculation that USD/CAD will reach the 1.10 level after the taper begins. EUR/CAD is up to 1.4617 from the open at 1.4604. GBP/CAD is up to 1.7380 from the open at 1.7350.

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