The Canadian dollar slumped this week due to risk aversion caused by concerns about potential trade wars between the United States and other countries, China in particular.
The vast majority of traders perceive US protectionism as detrimental to the global economy. Considering that China seems to be the primary target for US tariffs, Canada’s economy was not threatened as much as economies of Australia and New Zealand because China is not a major trading partner of Canada. Still, trade wars would be detrimental to everyone, including the economy of the United States, which actually are a major trading partner of Canada.
Another negative factor for the Canadian currency were dovish remarks by Bank of Canada Governor Stephen Poloz.
Some market analysts attributed the weakness of the loonie also to the rally of the US dollar. The greenback was profiting from anticipation of an interest rate hike by the Federal Reserve next week.
USD/CAD jumped from 1.2815 to 1.3095. EUR/CAD rallied from 1.5774 to 1.6090. CAD/JPY dropped from 83.11 to 80.90.
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