The Canadian dollar was rising during the Asian trading session on Thursday, managing to maintain the rally it started on Wednesday. The rise of the currency was caused by the news about a surprise decision by the Organization of Petroleum Exporting Countries to limit its crude oil production.
As one could expect, the announcement of the production cut was welcomed by crude oil as the commodity demonstrated huge gains on Wednesday and continued to rise on Thursday. Usually, the Canadian currency has a strong correlation with moves of oil prices, though during the first two trading sessions of this week such correlation was broken. Yet now, the loonie resumed its usual behavior, moving in tandem with crude.
The lack of hints from the US Federal Reserve policy makers about monetary tightening was also beneficial to the Canadian dollar as well to most other currencies (with the exception of the US dollar, of course). Prospects for the end of “cheap money” provided by extremely loose policy of the US central banks scare investors, making them shun riskier currencies. Consequently, speculators become bolder and more willing to risk when chances for such an event look smaller.
USD/CAD traded at 1.3053 as of 00:53 GMT today after falling from 1.3196 to 1.3054 yesterday. EUR/CAD was at about 1.4655 following the declined from 1.4799 to 1.4669. CAD/JPY climbed from 76.06 to 76.95 on Wednesday and extended its rally to 77.43 on Thursday.
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