Canadian Dollar Dragged Down by Oil Prices & Falling GDP

The Canadian dollar was extremely weak today, falling even against the soft US dollar. The Canadian currency was dragged down by the slump of crude oil prices and the unexpected decline of Canada’s economy.
Canadian gross domestic product fell 0.2 percent in May, demonstrating the fifth consecutive monthly decline. Market participants had hoped ahead of the report that it would show a zero change.
Crude oil prices sank more than 1 percent during the Friday’s session, and unlike some other commodities, crude was unable to bounce on the back of the US dollar’s weakness. Moves of the loonie are strongly correlated to the performance of oil prices, meaning that a drop of the commodity often leads to a fall of the currency.
All the negative factors suggest a strong possibility of another interest rate cut that would follow this month’s reduction of borrowing costs. Such outlook is very detrimental to the Canadian dollar.
USD/CAD rallied from 1.2994 to 1.3039 as of 16:20 GMT today. EUR/CAD jumped as much as 1.3 percent from 1.4208 to 1.4394, and its daily high was at 1.4449. CAD/JPY declined from 95.46 to 94.98.

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